Abstract
The theory of foreign direct investment (henceforth referred to as FDI) is of relatively recent origin. It was first put forward in 1960 by Stephen Hymer in his PhD thesis at Massachusetts Institute of Technology (MIT) (Hymer, 1976). Before that time, the various international capital movements were not distinguished from one another, since they were all explained in terms of differentials in interest rates between the various countries. However, this theory was at odds with certain facts and trends, already clearly identifiable at the end of the 1950s, which were to characterize the next two decades. In particular, there were : the local financing of the foreign subsidiaries of American enterprises, and the simultaneous onset of portfolio investment from European countries in the United States and of FDI from the USA in Europe. These factors made it extremely difficult to accept a single, unified explanation of all these different capital flows. The predominance of FDI in some industries, and at the same time the existence of crossed FDI in a particular industry, were further factors which underlined the need for a specific hypothesis to explain the phenomenon of FDI and induced researchers to seek the hypothesis in the field of industrial organization and outside balance of payments theory.
I should like to thank John Cantwell and Francesca Sanna Randaccio for their helpful comments regarding earlier drafts of this paper.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Bibliography
ACOCELLA, N. (1975) Imprese Multinazionali e Investimenti Diretti le Cause dello Sviluppo, Milano: Giuffrè.
ACOCELLA, N. (ed.) (1985) Le Multinazionali Italiane, Bologna: II Mulino.
ALIBER, R.Z. (1970) ‘A Theory of Direct Foreign Investment’, in C.P. Kindleberger (ed.) The International Firm, Cambridge, Mass.: MIT Press.
BUCKLEY, P.J. (1985) ‘A Critical View of the Theory of the Multinational Enterprise’, in P.J. Buckley and M. Casson, The Economic Theory of Multinational Enterprise, New York: St Martins Press.
BUCKLEY, P.J. and CASSON, M. (1976) The Future of the Multinational Enterprise, London: Macmillan.
BULOW, J.I., GEANAKOPLOS, J.D. and KLEMPERER, P.D. (1985) ‘Multimarket Oligopoly: Strategic Substitutes and Complements’, Journal of Political Economy 93.
CALVET, A.L. (1981) ‘A Synthesis of Foreign Direct Investment Theories and Theories of Multinational Firm’, Journal of International Business Studies 12, pp. 43–60.
CANTWELL, J. (1989) ‘Teorie dell’ Internalizzazione della Produzione’, in N. Acocella, and R. Schiattarella (eds) Teorie dell’ Internazionalizzazione e Realtà Italiana (an English version is also available as: ‘Theories of International Production’, University of Reading DP in International Investment and Business Studies, no. 122, 1988).
CASSON, M. (1984) ‘General Theories of Multinational Enterprise: A Critical Examination’, University of Reading DP in International Investment and Business Studies, no. 77.
CASSON, M. (1985a) ‘Transaction Costs and the Theory of the Multinational Enterprise’, in P.J. Buckley, and Casson, M., The Economic Theory of Multinational Enterprise New York: St Martins Press.
CASSON, M. (1985b) ‘Multinational Monopolies and International Cartels’, in P.J. Buckley, and M. Casson, The Economic Theory of Multinational Enterprise, New York: St Martins Press.
COASE, R. (1937) ‘The Nature of the Firm’, Economica, November, reprinted in K.E. Boulding and K.E. Stigler (eds) Readings in Price Theory, Homewood: Richard D. Irwin, 1952.
COWLING, K. and SUGDEN, R. (1987) Transnational Monopoly Capitalism, Brighton: Wheatsheaf.
DIXIT, A. (1979) ‘A Model of Duopoly Suggesting a Theory of Entry Barriers’, Bell Journal of Economics 10, pp. 20–32.
DIXIT, A. (1980) ‘The Role of Investment in Entry Deterrence’, Economic Journal, 90. pp. 95–106.
DOZ, Y.L. (1980) ‘Strategic Management in Multinational Companies’, Sloan Management Review, Winter 21, pp. 27–46.
DUNNING, J.H. (1979) ‘Foreword’ to N. Hood and S. Young, The Economics of Multinational Enterprise London: Longman.
DUNNING, J.H. (1981) International Production and Multinational Enterprise, London: Allen & Unwin.
DUNNING, J.H. (1988) ‘The Eclectic Paradigm of International Production An Update and Reply to its Critics’, Journal of International Business Studies, Spring, 19, pp. 1–31.
ENCAOUA, D., GEROSKI, P. and JACQUEMIN, A. (1986) ‘Strategic Competition and the Persistence of Dominant Firms: A Survey’, in J. Stiglitz and G.F. Mathewson (eds) New Developments in the Analysis of Market Structure, Cambridge, Mass.: MIT Press.
EDWARDS, C.D. (1979) ‘The Multimarket Enterprise and Economic Power’, Journal of Economic Issues 13, pp. 285–301.
FEINBERG, R.M. (1985) “Sales-at-Risk”: A Test of the Mutual Forbearance Theory of Conglomerate Behaviour’, Journal of Business, vol. 58, pp. 225–41.
FRANKO, L.G. (1977) ‘European Multinational Enterprises in the Integration Process’, in G.V. Curzon (ed.) The Multinational Corporation in a Hostile World, London: MacMillan.
GEROSKI, P. and JACQUEMIN, A. (1984) ‘Dominant Firms and Their Alleged Decline’, International Journal of Industrial Organization, 2, pp. 1–27.
GRAHAM, E.M. (1978) ‘Transatlantic Investment by Multinational Firms: A Rivalistic Phenomenon?’, Journal of Post-Keynesian Economics 1 no. 1, pp. 82–9.
GREER, C.R. and SHEARER, J.C. (1981) ‘Do Foreign-owned US Firms Practice Unconventional Labour Relations?’, Monthly Labour Reriew 104, pp. 44–8.
GROSSE, R.E. (1980) Foreign Investment Codes and Location of Direct Investment New York: Praeger.
HYMER, S.H. (1965) ‘Direct Foreign Investment and International Oligopoly’, Mimeo.
HYMER, S.H. (1968) ‘La Grande Corporation Multinationale’, Revue Economigue, no. 6.
HYMER, S.H. (1970) ‘The Efficiency (Contradictions) of the Multinational Corporation’, American Economic Review, 60, pp. 441–8.
HYMER, S.H. (1971) ‘The Multinational Corporation and the Law of Uneven Development’, in J.R. Bhagwati, (ed.) Economics and World Order, New York: World Law Fund.
HYMER, S.H. (1976) The International Operations of National Firms, Lexington: Lexington Books, (reproduction of his PhD thesis, 1960).
IL.O (International Labour Organization) (1976) Multinationals in We.stern Europe: The Industrial Relations Experience, Geneva.
JACQUEMIN, A. (1987) The New Industrial Organization, Market Forces and Strategic Behaviour. Oxford: Clarendon Press.
JACQUEMIN, A. (1989) ‘II Comportamento Strategico Internazionale e Multinazionale’, in N. Acocella and R. Schiattarella (eds) Teorie dell’ Internazionalizzazione e Realtà Italiana. Napoli: Liguori.
KINDLEBERGER, C.P. (1969) American Business Abroad, New Haven: Yale University Press.
KINDLEBERGER, C.P. (1984) Multinational Excursions, Cambridge, Mass.: MIT Press.
KOJIMA, K. (1978) Direct Foreign Investment: A Japanese Model of Multinational Business Operations, London: Croom Helm.
LALL, S. (1983) The New Multinationals. The Spread of Third World Enterprises, New York: Wiley and Sons.
NEWFARMER, R. (1979) ‘Oligopolistic Tactics to Control Markets and the Growth of TNCs in Brazil’s Electrical Industry’, Journal of Develoment Studies, April, 15, pp. 108–40.
OZAWA, T. (1979) Multinationalism, Japanese Style: The Political Economy of Outward Dependency, Princeton, NJ: Princeton University Press.
RAGAZZI, G. (1973) ‘Theories of the Determinants of Direct Foreign Investment’, IMF Staff Papers, July.
SANNA RANDACCIO, F. (1984) ‘The Current State of Research on the Theory of Multinational Enterprise’, EUI Colloquium Papers on ‘The Early Phase of Multinational Enterprise in Germany, France and Italy, Florence, 17–19 October.
SCOTT, J.T. (1982) ‘Multimarket Contact and Economic Performance’, Review of Economics and Statistics 64, pp. 368–75.
SMITH, A. (1987) ‘Strategic Investment, Multinational Corporations and Trade Policy’, European Economic Review 31, pp. 89–96.
SPENCE, M. (1977) ‘Entry Capacity, Investment and Oligopoly Pricing’, Bell Journal of Economics, 8, pp. 534–44.
STOPFORD, J.M. and WELLS, L.T. (1972) Managing the Multinational Enterprise, New York: Basic Books.
STREETEN, P. (1976) ‘Bargaining with Multinationals’, World Development, 4, pp. 225–9.
SUGDEN, R. (1985) ‘Why Transnational Corporations?’. mimeo.
TEECE, D.J. (1981) ‘Multinational Enterprise: Market Failure and Market Power Consideration’. Sloan Management Review. 22. pp. 3–17.
TEECE, D.J. (1983) ‘Technological and Organizational Factors in the Theory of Multinational Enterprise’, in M. Casson (ed.) The Growth of lnternational Business, London: Allen & Unwin.
TEECE, D.J. (1985) ‘Multinational Enterprise, Internal Governance and Industrial Organization’, American Economic Review, May, 75, pp. 233–8.
TEECE, D.J. (1986) ‘Transaction Cost Economics and the Multinational Enterprise. An Assessment’, Journal of Economic Behaviour and Organization 7, pp. 21–45.
TURVANI, M. (1987) ‘Introduzione’, in Williamson O.E., Le istituzioni economiche del capitalismo, Milano: Angeli.
VERNON, R. (1979) ‘The Product Cycle Hypothesis in the New International Environment’, Oxford Bulletin of Economics and Statistics, November, 41, pp. 255–67.
WELLS, L.T. (1983) Third World Multinationals, Cambridge, Mass.: MIT Press.
WILLIAMSON, O.E. (1975) Markets and Hierarchies, Analysis and Antitrust Implications, New York: The Free Press.
WILLIAMSON, O.E. (1981) ‘The Modern Corporation: Origins, Evolution, Attributes’, Journal of Economic Literature, November; reproduced in Williamson, 1985. as chap. 11.
WILLIAMSON, O.E. (1985) The Economic Institutions of Capitalism. Firms, Markets, Relational Contracting, New York: The Free Press. Ital. trans., Le istituzioni del capitalismo, Milano: Angeli, 1987.
YU, C.M. and ITO, K. (1988) ‘Oligopolistic Reaction and Foreign Direct Investment: The Case of the U.S. Tire and Textiles Industries’, Journal of International Business Studies, Fall, 19, pp. 447–60.
Editor information
Editors and Affiliations
Copyright information
© 1992 Palgrave Macmillan, a division of Macmillan Publishers Limited
About this chapter
Cite this chapter
Acocella, N. (1992). The Multinational Firm and the Theory of Industrial Organization. In: Del Monte, A. (eds) Recent Developments in the Theory of Industrial Organization. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11771-0_10
Download citation
DOI: https://doi.org/10.1007/978-1-349-11771-0_10
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-11773-4
Online ISBN: 978-1-349-11771-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)