The Theory of International Business: The Role of Economic Models

Research Article
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Abstract

This paper reviews the scope for economic modelling in international business. It argues for a multi-level theory based on classical internalisation theory. The theory extends the ‘systems approach’ to the multinational enterprise in which modular activities, such as production, marketing and R&D, are linked by flows of semi-processed products and proprietary knowledge. It is shown how this theory can be extended from the firm level to the industry level in order to analyse inter-firm co-operation and rivalry. The theory can be extended to higher levels (e.g., the global economy) and lower levels (e.g., personal relationships within plants and offices).

Keywords

International business Multinational enterprise Internalisation Theory System Modularity Decision tree 

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.University of ReadingReadingUK

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