International business has occupied a prominent position in many economies in the twentieth century. Of the nations we are studying, America, Britain and Japan have been among the largest sources of international business, Australia, America and Britain some of its leading recipients. The globalisation of markets and technology, particularly in the 1990s, has increased dramatically the size and reach of many international firms and influenced the ways in which they organise their activities. The arrival of foreign firms can provide a stimulus to a nation’s economic development through flows of investment, technology, skills and knowledge. At the same time, receiver countries fear the threat to national self-determination and endogenous progress from large, and perhaps culturally alien, corporations. Sender nations are also sensitive to the likely loss of exports and leakage of competitive advantages as domestic firms move abroad. Thus, the activities of large powerful international firms have generated strong emotions regarding business ethics and the extent of their corporate responsibilities, particularly in small developing host economies. As multinationals increasingly cross cultures and continents in the twenty-first century, their relationships with their hosts have become a paramount issue. American firms like K-Mart, Wal-Mart, Coca-Cola and McDonald’s have recently learned some hard lessons about the obstacles to international expansion; what works at home often does not in the host nation (Box 10.3).
KeywordsForeign Direct Investment International Business Intangible Asset Entry Mode Home Economy
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