Commentary: Why and how can Multinational Enterprises be value-creating organizations?
Hennart,Jean-Francois
Hennart,Jean-Francois
Abstract
Rugman made the valid point that Multinational Enterprises are value-creating organizations but in this piece I question his explanation of why this is the case. I argue that it is not, as Rugman proposed, because MNEs are better at safeguarding their firm-specific advantages (FSAs) but because having them hold the equity is sometimes the most efficient way to bundle assets. I present a more general model of internalization that shows why MNEs can be the most efficient way to both exploit and acquire FSAs, why a firm does not need to have FSAs to become an MNE, and why internalization is not a question of setting up internal markets but consists instead in the replacement of output by behavior constraints. (C) 2015 Elsevier Inc. All rights reserved.
Description
Date
2015-10
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
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Journal Issue
Keywords
TRANSACTION COST, MARKET
Citation
Hennart, J-F 2015, 'Commentary : Why and how can Multinational Enterprises be value-creating organizations?', Journal of World Business, vol. 50, no. 4, pp. 623-626. https://doi.org/10.1016/j.jwb.2015.08.004