Applying and advancing internalization theory: The multinational enterprise in the twenty-first century

Abstract

Internalization theory has provided a resilient analytical framework that explicitly or implicitly underlines much of International Business scholarship. Internalization theory is not a monolithic body of knowledge; instead, it has devolved into several 'streams', each of which focuses on the interests of particular epistemic communities, while also acting as a more generic organizing framework for those more broadly interested in its application to real-world challenges. Following a review of the various streams, we trace the frontiers of current research of the broader internalization framework and identify emerging themes raised by the papers in the special issue. These include transaction cost considerations in the bundling and recombination of assets across diverse contexts, the growing relevance of quasi-internalization, the theoretical challenges of (bounded) rationality for internalization theory, and the increasing disconnect between ownership, control and responsibility. These developments point to new research frontiers for scholars looking to apply or advance internalization theory.

Managing the MNE subsidiary: Advancing a multi-level and dynamic research agenda

“…Shared resources from the MNE parent provide subsidiaries with potential competitive advantages. IB scholars discuss these transferable resources as firm-specific advantages or ownership advantages (Dunning, 1993;Narula, Asmussen, Chi, & Kundu, 2019). Traditionally, they arise primarily from shared technologies and brands.…”

Digitalized service multinationals and international business theory

“…To handle these types of FDIs not fitting his original model, Dunning added a new type of FSA/ ownership advantage (O t ), which he called ''advantages of common governance'' and which ''arise because of multinationality''. Narula (2014Narula ( , 2017 sees these O t advantages as consisting of a firm's ability to coordinate intra-firm activities and to combine its FSAs with assets owned by external actors (see also Narula, Asmussen, Chi & Kundu, 2019). To the extent that these advantages derive from having successfully internalized the transaction, this is tautological, because this category of FSA can only be observed ex post.…”

“…While it may be tempting, following Narula (2014), Gaur, Patnaik, Lee and Singh (2019), and Narula et al (2019) to call an ability to more efficiently organize interdependencies internally and externally an ownership advantage, this should be resisted for a number of reasons. First, treating these capabilities as ownership advantages results in tautological predictions.…”

“…First, treating these capabilities as ownership advantages results in tautological predictions. Seeing that McDonalds had successfully externalized local fast-food production, Narula et al (2019) would explain this by McDonalds' external transactional FSA (a superior ability to externalize transactions, or an O te ). The problem is that this is not falsifiable since we only know ex post that McDonalds had this advantage.…”

Managerial governance adaptation in the multinational enterprise: In honour of Mira Wilkins

“…Internalisation theory, especially the Rugmanesque stream, was originally conceived to guide IB research and practice towards crafting efficient governance for exploiting FSAs. The Buckley and Casson (1976, 1998 stream, the Hennart (1977Hennart ( , 1982 stream and the stream developed by Dunning and colleagues, see Cantwell (2015), Dunning & Lundan (2008), and Narula (2010), had a somewhat different perspective, as carefully explained in Narula, Asmussen, Chi and Kundu (2019).…”