A Long-run Theory of the Multinational Enterprise

  • Peter J. Buckley
  • Mark Casson


It is little exaggeration to say that at present there is no established theory of the multinational enterprise. Previous economic and statistical studies of the MNE can be criticised on the grounds that they lack a comprehensive theoretical basis. But from another point of view the fault lies with the orthodox theories of production and trade because as presently formulated they are unable to explain or predict the post-war growth of MNEs. We shall argue that the growth of the MNE is one aspect of a radical change in business organisation which has outdated the orthodox theory of production.1


Communication Cost Future Market Transfer Price Optimal Scale Multinational Enterprise 
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  1. 1.
    For a recent survey of the orthodox theory of production see G. C. Archibald (ed.), Theory of the Firm, Selected Readings (London, 1974).Google Scholar
  2. The theory of trade is based on the theory of production, see for example M. C. Kemp, The Pure Theory of International Trade and Investment (Englewood Cliffs, 1971).Google Scholar
  3. 2.
    The discussion below owes much to the classic analyses by R. H. Coase, ‘The Nature of the Firm’, Economica, 4 (1937), 386–405;CrossRefGoogle Scholar
  4. N. Kaldor, ‘The Equilibrium of the Firm’, Economic Journal, 44 (1934), 60–76;CrossRefGoogle Scholar
  5. E. T. Penrose, The Theory of the Growth of the Firm (Oxford, 1961).Google Scholar
  6. R. Vernon, Sovereignty at Bay (London, 1971).Google Scholar

Copyright information

© Peter J. Buckley and Mark Christopher Casson 1991

Authors and Affiliations

  • Peter J. Buckley
    • 1
  • Mark Casson
    • 2
  1. 1.University of Bradford Management CentreUK
  2. 2.University of ReadingUK

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