Towards a Theory of Multinational Enterprise

Abstract

Since the well-documented post-war increase in the number and size of multinational enterprises, economists, marketing and management theorists have paid considerable attention to the determinants of the multinational decision. In general, early studies investigating the multinational phenomenon have concentrated on demand-side factors, such as the present size and anticipated growth rate of an overseas market, and how they impact on a firm’s decision to go international. These studies have not been successful in discriminating between the different organisational and strategic options available to the multinational enterprise; this is at least partly due to the standard neoclassical assumptions of aggregation which ignore market and technological interdependencies, and assume perfect knowledge on the part of economic decision makers.

This chapter was co-authored with Craig Galbraith, and is reprinted from The Journal of Economic Behavior and Organization, 7, ‘Towards a theory of multinational enterprise’, 1986 1–19, with kind permission of Elsevier Science, NL Sara Burgerhartstraat 25, 1055 KV Amsterdam, The Netherlands.