The Multinational Enterprise Revisited: The Essential Buckley and Casson

322 Pages·2010·1.812 MB·English

by  Peter J. Buckley, Mark Casson (auth.)

The Multinational Enterprise Revisited
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The Multinational
Enterprise Revisited
The Essential Buckley and Casson
Peter J. Buckley
Professor of International Business, University of Leeds, UK
Mark Casson
Professor of Economics, University of Reading
© Peter J. Buckley and Mark Casson 2010
Softcover reprint of the hardcover 1st edition 2010 978-0-230-51599-4
All rights reserved. No reproduction, copy or transmission of this
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Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency,
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Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified as the authors of this
work in accordance with the Copyright, Designs and Patents Act 1988.
First published 2010 by
PALGRAVE MACMILLAN
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registered in England, company number 785998, of Houndmills, Basingstoke,
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Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries
ISBN 978-1-349-35424-5 ISBN 978-0-230-25046-8 (eBook)
DOI 10.1057/9780230250468
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10 9 8 7 6 5 4 3 2 1
19 18 17 16 15 14 13 12 11 10
Contents
List of Figures vi
List of Tables viii
Acknowledgements x
1 The Future of the Multinational Enterprise after 30 Years 1
2 The Optimal Timing of a Foreign Direct Investment 25
3 A Theory of Cooperation in International Business 41
4 Multinational Enterprises in Less Developed Countries:
Cultural and Economic Interactions 68
5 Organising for Innovation: The Multinational Enterprise
in the Twenty-First Century 96
6 An Economic Model of International Joint
Venture Strategy 118
7 Models of the Multinational Enterprise 147
8 Analysing Foreign Market Entry Strategies: Extending
the Internalisation Approach 177
9 The Moral Basis of Global Capitalism:
Beyond the Eclectic Theory 205
10 Strategic Complexity in International Business 239
11 Edith Penrose’s Theory of the Growth of the Firm and
the Strategic Management of Multinational Enterprises 277
Index 301
v
List of Figures
2.1 Derivation of minimum average cost 27
2.2 The discontinuous marginal revenue curve 28
2.3 Optimal switching of modes 29
2.4 Direct switching from exporting to FDI 31
2.5 Dynamics of switching 33
3.1 Forward integration into a JV 54
3.2 Backward integration into a JV 54
3.3 Buy-back arrangement 55
3.4 Multistage arrangement 55
3.5 The dominant partner in networks 65
4.1 The development of international trade between
developed countries 86
4.2 The role of developed countries in the development
of LDCs 89
5.1 Schematic summary of the innovation process 105
6.1 Schematic illustration of four IJV configurations
generated by the sharing of technology and
marketing expertise contributed by two firms 122
6.2 Schematic illustration of IJV configurations 5–9 based
on a single shared production facility 124
6.3 Configuration after Firm 2 has been acquired and
rationalised by Firm 1 126
6.4 Configuration when Firm 1 licences in technology
from Firm 2 127
6.5 Influence of market size on strategic choice 135
6.6 Impact of volatility factor on strategic choice 136
6.7 Combined impact of market size and volatility on
strategic choice 137
vi
List of Figures vii
6.8 Impact of cultural heterogeneity, protection of
independence, economies of scope and technological
uncertainty on strategic choice 139
6.9 Comparative analysis of the international business
environment in the 1960s and 1980s 141
8.1 Twelve entry strategies and their variants 190
10.1 Diagrammatic solution of the entry strategy under
uncertainty 248
10.2 Strategy for information gathering 250
10.3 Comparison of decision trees with and without research 252
10.4 Decision tree for integrated research/waiting/switching
problem 255
10.5 Diagrammatic solution of an entry problem encompassing
research, deferment and switching 257
10.6 Schematic representation of a simple international
business system 260
List of Tables
4.1 Factors in the long-run economic success
of a nation 74
6.1 Typology of IJVs according to the kind of
knowledge shared 121
6.2 Key determinants of the costs of alternative strategies 129
6.3 Impact of market size and volatility on strategic choice 138
6.4 Impact of key explanatory factor on strategic choice 144
8.1 Twelve entry strategies and their variants 188
8.2 Costs of alternative strategies compared with the
profit norm 191
8.3 Comparative static analysis of the effects of changes in the
values of the explanatory variables on the choice between
the three dominant strategies 196
8.4 Comparative static analysis of the effects of changes in the
values of the explanatory variables on the propensity to
adopt each possible entry mode 197
9.1 The rhetoric of moral manipulation: Five views of human
nature compared 216
9.2 Who benefits most from self-control? A comparative
analysis by type of control 218
9.3 Two dimensions of a socio-economic system:
Degree of decentralisation and degree of altruism 221
9.4 Winners and losers from the globalisation of capitalism 228
10.1 Two possible errors in strategic choice under uncertainty 248
10.2 Foreign entry strategy set encompassing research,
deferment and switching, assuming that it is always
profitable to serve the market 256
10.3 Tabular representation of flows illustrated in Figure 10.6 262
10.4 Structure of location costs for the flows illustrated in
Figure 10.1 (excluding sunk costs of marketing
and distribution) 265
viii
List of Tables ix
10.5 Dominant locational strategies 266
10.6 Alternative contractual arrangements for linking
domestic R&D to foreign distribution 270
11.1a Sequential entry into national markets with a
fixed product range 288
11.1b The innovation diffusion model sequential
product innovation with overlapping sequential
local entry 288
11.2 The Buckley and Casson model: Sequential product
innovation with simultaneous local entry 290