Globalisation, economic geography and the strategy of multinational enterprises

Abstract

The intention of this paper is to review the literature linking ownership and location strategies to economic geography and theories of globalisation and to explore new areas of research. This paper examines globalisation in terms of conflicts between markets and economic management, and suggests that the differential pace of globalisation across markets presents a number of challenges to policy makers in local, national and regional governments, and in international institutions. In examining the changing location and ownership strategies of MNEs, it shows that the increasingly sophisticated decision making of managers in MNEs is slicing the activities of firms more finely and in finding optimum locations for each closely defined activity, they are deepening the international division of labour. Ownership strategies, too, are becoming increasingly complex, leading to a control matrix that runs from wholly owned units via FDI through market relationships such as subcontracting, including joint ventures as options on subsequent decisions in a dynamic pattern. The input of lessons from economic geography is thus becoming more important in understanding the key developments in international business. The consequences of the globalisation of production and consumption represent political challenges, and reaction against these changes has led to a questioning of the effects of global capitalism as well as to its moral basis. These four issues are closely intertwined and present a formidable research agenda to which the international business research community is uniquely fitted to respond. Journal of International Business Studies (2004) 35, 81–98. doi:10.1057/palgrave.jibs.8400076

Internalisation Theory and Outward Direct Investment by Emerging Market Multinationals

“…These network relationships are complex and bargaining and negotiation, as well as ''pure'' market interactions surround the firm. This is the essence of the networkand theorising around network relationships is critical, given that multinationals are often focal [or flagship (Rugman and D'Cruz 2000) or orchestrating (Hinterhuber 2002)] firms, central to a ''global factory'' structure that involves a constellation of independent firms (Buckley 2011a, b;Buckley and Ghauri 2004;Eriksson et al 2014). These dynamically shifting boundaries are a major focus of international business research (Hennart 2009) and have been since the beginning of the subject (Casson 1979;Caves 1980).…”

The contribution of internalisation theory to international business: New realities and unanswered questions

“…It became logical therefore to envisage MNEs as key players in a global systems view Hashai 2004, Casson 2000). The MNE centred aspects of these developments is picked up in the conceptualisation of 'the global factory' (Buckley and Ghauri 2004).…”

“…It most closely sits within the firm-based view to give a 'global factory' (Buckley, 2009, 2011, Buckley & Ghauri 2004 or 'flagship firm' (Rugman and D'Cruz 2000) conceptual framework where a focal firm (orchestrating firm (Hinterhuber 2002) or chain leader (Gereffi 1999(Gereffi , 2001) set the overall strategy and associated, satellite firms (often SMEs) support the network leader (Eriksson, Nummela and Saarenketo 2014).…”

“…The explicit introduction of marketing into the internalisation theory of the multinational enterprise extends the power of the theory by enabling a comparison of marketing-led and technology-led MNEs and highlighting the benefits of collaboration between them. It facilitates the analysis of outsourcing, in particular of R&D and shows the importance to marketing led firms of owning product rather than facilities helping the understanding of "hollow firms", "flagship firms" (Rugman and D'Cruz 2000) and "the global factory" (Buckley and Ghauri 2004, Buckley 2009, 2011.…”

Economic nationalism and foreign acquisition completion: The case of China

“…Economic nationalism has been widely misinterpreted as an ideology associated with 'protectionism' fending off foreign MNEs (in favor of domestic ownership) in areas like political economy (Baughn & Yaprak, 1996;Dicken, 2007;Helleiner, 2002) and IB (i.e., Buckley & Ghauri, 2004), and with nationalistic sentiments and ethnocentricity in marketing (e.g., Balabanis, Diamantopoulos, Mueller & Melewar, 2001). However, there are contrasting differences between these two terms.…”