International Business Context articles - 2021 Universiteit van Amsterdam
Article Authors Year Key take-aways Conclusion
Week 1 - introduction
1. The Future of the Buckley & 1976 Internalization theory: - Post-war firms FDI may be explained as the
Multinational Enterprise Casson • Firms maximize profit in a world of imperfect markets. internalization of knowledge. R&D investments
• When markets in intermediate products are imperfect, are towards search for knowledge of
there is an incentive to bypass them by creating internal commercial potential and the exploitation of the
markets. This involves bringing under common ownership firm’s own proprietary knowledge.
and controlling the activities which are linked by the
market. - Now MNEs are in second phase of life =
• Internalization of markets across national boundaries more defensive towards take-over, progressive
generates MNEs. decline and redeployment.
2. How to design a winning Casadesus- 2011 • Successful busines models generate virtuous cycles, or Strategy focuses on building competitive
business model Masanell and feed-back loops, that are self-reinforcing. à Strengthen advantage by defending a unique position and
Joan E. Ricart the business à more competitive adv. resources. Those resources and positions are
created by virtuous cycles, so executives
Companies can compete in three ways: should create business models that create
1. Strengthen their own virtuous cycles (generate new those cycles.
cycles)
2. Block or destroy cycles of the rivals à That is the essence of competitiveness!
3. Build complementary with the cycles of the rivals
• Business models is logic of the company; strategy is the
plan to create a unique and valuable position; tactics is
how you perform your plan.
3. Applying and advancing Narula et al. 2019 Internalization in different streams: Internalization theory is not a monolithic body
internalization theory: The 2019 of knowledge but has evolved into several
multinational enterprise in (1) The Buckley and Casson (1976) Stream ‘streams:
the twenty-first century • Explains why the MNE prefers to organize cross-border - Buckley & Casson
value-adding activities through the hierarchy rather than - Hennart
the market. - Rugman
• MNE’s: superior efficiency and limits transaction - Dunning
costs (because risks in transactions are lower). both the
case in terms of risk and uncertainty, but also in
information asymmetry.
(2) The Hennart (1977, 1982) Stream
1
, International Business Context articles - 2021 Universiteit van Amsterdam
• Contributed to Buckley and Casson by including additional
types of transaction costs such as enforcement costs,
bounded rationality and the cost of opportunistic behavior.
• Also claims MNEs only arise when markets are imperfect.
• the ‘swollen middle’: companies both make use of the
market as well as internalize, and base their decision on
whatever is more efficient for that element of the business
(3) The Rugman Stream
• Internalization theory by building into explicit
considerations of resource characteristics, in parallel to
development in strategy that led to the resource-based
view.
• This view is more firm-specific, and it includes location
and non-location bound FSA’s and CSA’
(4) The Dunning Stream
• Contributed the eclectic paradigm, aka. the OLI model
merging the former theories together.
4. Toward an eclectic Dunning 1980 To engage in international production the determinant is: • The more the ownership specific
theory of international • The extent to which it possesses assets which its advantages a firm possesses, the
production; some competitors does not possess greater the inducement to internalize
empirical tests • Whether it is interest to sell or lease these assets to other them.
firms, or make use of them itself • Ownership advantages determine which
• How far it is profitable to exploit these assets in firms will supply a particular foreign
conjunction with the indigenous resources of foreign market. Location endowments explains
countries rather than those of the home country. whether the firm will supply the market
by exports (trade) or by local production
The eclectric paradigm is about analyzing the attractiveness of (non-trade).
making a FDI (ownership, location and internalization adv.) à all • Incentive of a firm to internalize its
3 adv are present? then the firm should go for FDI. ownership endowments is to avoid the
disadvantages or capitalize on the
imperfections.
Week 2- institutions
1. Managing government, Mintzberg 1996 How should the government be managed? There is no best model. However, extensive
governing management attention is given to the machine model.
• Government as a machine model:
Dominated by rules, regulations and standards. Each agency Business can learn from government no less
controls its people as the agency is controlled by the central than government can learn from business; and
2
Article Authors Year Key take-aways Conclusion
Week 1 - introduction
1. The Future of the Buckley & 1976 Internalization theory: - Post-war firms FDI may be explained as the
Multinational Enterprise Casson • Firms maximize profit in a world of imperfect markets. internalization of knowledge. R&D investments
• When markets in intermediate products are imperfect, are towards search for knowledge of
there is an incentive to bypass them by creating internal commercial potential and the exploitation of the
markets. This involves bringing under common ownership firm’s own proprietary knowledge.
and controlling the activities which are linked by the
market. - Now MNEs are in second phase of life =
• Internalization of markets across national boundaries more defensive towards take-over, progressive
generates MNEs. decline and redeployment.
2. How to design a winning Casadesus- 2011 • Successful busines models generate virtuous cycles, or Strategy focuses on building competitive
business model Masanell and feed-back loops, that are self-reinforcing. à Strengthen advantage by defending a unique position and
Joan E. Ricart the business à more competitive adv. resources. Those resources and positions are
created by virtuous cycles, so executives
Companies can compete in three ways: should create business models that create
1. Strengthen their own virtuous cycles (generate new those cycles.
cycles)
2. Block or destroy cycles of the rivals à That is the essence of competitiveness!
3. Build complementary with the cycles of the rivals
• Business models is logic of the company; strategy is the
plan to create a unique and valuable position; tactics is
how you perform your plan.
3. Applying and advancing Narula et al. 2019 Internalization in different streams: Internalization theory is not a monolithic body
internalization theory: The 2019 of knowledge but has evolved into several
multinational enterprise in (1) The Buckley and Casson (1976) Stream ‘streams:
the twenty-first century • Explains why the MNE prefers to organize cross-border - Buckley & Casson
value-adding activities through the hierarchy rather than - Hennart
the market. - Rugman
• MNE’s: superior efficiency and limits transaction - Dunning
costs (because risks in transactions are lower). both the
case in terms of risk and uncertainty, but also in
information asymmetry.
(2) The Hennart (1977, 1982) Stream
1
, International Business Context articles - 2021 Universiteit van Amsterdam
• Contributed to Buckley and Casson by including additional
types of transaction costs such as enforcement costs,
bounded rationality and the cost of opportunistic behavior.
• Also claims MNEs only arise when markets are imperfect.
• the ‘swollen middle’: companies both make use of the
market as well as internalize, and base their decision on
whatever is more efficient for that element of the business
(3) The Rugman Stream
• Internalization theory by building into explicit
considerations of resource characteristics, in parallel to
development in strategy that led to the resource-based
view.
• This view is more firm-specific, and it includes location
and non-location bound FSA’s and CSA’
(4) The Dunning Stream
• Contributed the eclectic paradigm, aka. the OLI model
merging the former theories together.
4. Toward an eclectic Dunning 1980 To engage in international production the determinant is: • The more the ownership specific
theory of international • The extent to which it possesses assets which its advantages a firm possesses, the
production; some competitors does not possess greater the inducement to internalize
empirical tests • Whether it is interest to sell or lease these assets to other them.
firms, or make use of them itself • Ownership advantages determine which
• How far it is profitable to exploit these assets in firms will supply a particular foreign
conjunction with the indigenous resources of foreign market. Location endowments explains
countries rather than those of the home country. whether the firm will supply the market
by exports (trade) or by local production
The eclectric paradigm is about analyzing the attractiveness of (non-trade).
making a FDI (ownership, location and internalization adv.) à all • Incentive of a firm to internalize its
3 adv are present? then the firm should go for FDI. ownership endowments is to avoid the
disadvantages or capitalize on the
imperfections.
Week 2- institutions
1. Managing government, Mintzberg 1996 How should the government be managed? There is no best model. However, extensive
governing management attention is given to the machine model.
• Government as a machine model:
Dominated by rules, regulations and standards. Each agency Business can learn from government no less
controls its people as the agency is controlled by the central than government can learn from business; and
2
