Analysis of Theoretical Approaches to Strategic Issues
There are various theories relating to strategy and internationalisation of firms and numerous authors have contributed to the discussion of these issues. The author has picked three strategy approaches able to explain internationalisation of firms. First, Porter’s market-based view (1.1) which closes a gap between strategy theory and internationalisation theory by asking how firms act in global markets1. Second, the resource-based view (1.2), which considers firms as a bundle of resources and capabilities available for deployment by the firm’s business units.2 The third theory that will be explained is transaction cost theory (1.3), represented mainly by Williamson. This approach considers the transaction as base for decision making. This theory explains why firms internalise3 transactions rather than relying on the domestic market.
KeywordsForeign Direct Investment Transaction Cost Competitive Advantage Foreign Market Market Entry
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