This summary contains all lectures of the International Strategy course including the articles discussed in the lecture and the reflections on the lectures.
Master Business Administration - International Business
International Strategy (6314M0173Y)
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Week 1 - Theoretical Foundations - lecture 1 3
Art. 1.1 - The co-evolution of MNEs and the institutional environment - Cantwell et al.
(2010) 4
Art. 1.2 - Organizing knowledge processes in the MNE (Foss & Pedersen, 2004) 6
Art. 1.3 - Transaction cost theory (TCT) of MNE strategic management (Rugman &
Verbeke) 9
Art. 1.4 - International Strategy for Michael Porter (1986) 11
Art. 1.5 - International strategy for Pankaj Ghemawat (2008) 13
Week 2 - Where do MNEs invest? - lecture 2 15
Art. 2.1 - The expansion of foreign direct investments: discrete rational location choices
or a cultural learning process? - Benito & Gripsrud (1992) 17
Art 2.2 - Spatial agglomeration of multinational enterprises: the role of information
externalities and knowledge spillovers - Mariotti, Piscitello & Elia (2010) 18
Art. 2.3 - Factors determining offshore location choice for R&D projects: A comparative
study for developed and emerging regions - Demirbag & Glaiser (2010) 20
Art. 2.4 - Cross-border relocations of headquarters in Europe - Laamanen, Simula, &
Torstila (2012) 21
Week 3 - How to invest abroad? - lecture 3 23
3.1 - Boundaries of the firm: Insights from international entry mode research - Brouthers
& Hennart (2007) 25
3.2 - Joint Venture and the option to expand and acquire - Kogut (1991) 27
3.3 - Institutions, resources, and entry strategies in emerging economies - Meyer, Estrin,
Bhaumik, & Peng (2009) 28
3.4 International acquisitions by emerging multinationals and the creation of value -
Gubbi, Aulakh, Ra, Sarkar, Chittoor (2010) 30
Week 4 - When do MNEs invest abroad? - Lecture 4.1 32
Art. 4.1 - First mover advantages - Lieberman and Montgomery, 1988 33
Art. 4.2 - A synthesis and conceptual framework - Kerin, Varadarajan, and Peterson
(1992) 35
Art. 4.3 - First mover advantages and firm-specific political resources - Frynas, Mellahi,
Pigman (2006) 37
Art. 4.4 - Timing of entry in international markets - Gaba, Pan, and Ungson (2002) 39
Week 5 - How do MNEs manage foreign subsidiaries? - Lecture 5
The integration - responsiveness framework (Bartlett & Ghoshal, 1989) 41
Art. 5.1 - Building FSAs in MNEs: the role of subsidiary initiatives (Birkinshaw et al.,
1998) 43
Art. 5.2 - Knowledge flows within MNEs: explaining subsidiary isolation (Monteiro et al.,
2008) 45
Art. 5.3. - Is knowledge power? Knowledge flows and subsidiary power (Mudambi and
Navarra, 2004) 47
Art. 5.4 - MNC subsidiaries and country risk (Feinberg and Gupta, 2009) 49
1
,Week 6 - Multinationality and Performance - Lecture 6.1 52
6.1 - Multinationality and performance (Lu and Beamish, 2004) (Pisani kent article goed)
53
Art. 6.2 - Internationalization process and performance (Vermeulen and Barkema, 2002)
55
Art. 6.3 - Internationalization speed and performance (Chang and Rhee, 2011) 57
Art. 6.4 - Multinationality and performance: a review (Hennart, 2007) 59
2
,Week 1 - Theoretical Foundations - lecture 1
Three main issues
1. How MNE theories help us understand what an international strategy is?
Core concepts from TIM course are the papers of Cantwell (2010), Foss & Pedersen (2004),
Rugman & Verbeke (1992)
2. How could we define international strategy?
3. What are the main issues to consider for a cross-border strategy?
The papers of Porter (1986) and Ghemawat (2008)
Core concepts from Theories of International Management course
❖ Transaction cost economics (Coase, Williamson)
→ key assumption is interdependency between agents generate transaction costs
❖ Internalization theory (Buckley, Casson, Hennart)
❖ OLI / Eclectic paradigm (Dunning)
❖ Internationalization Theory (Johanson and Vahlne)
❖ Bridge from internalization theory to strategic management (Rugman):
- FSAs as asset and transactional advantages
- Important of Location / Non-location bound FSAs
❖ The role of subsidiary (Birkinshaw)
❖ From the 1980s: Industry-based view (Porter)
- Industry-level, notion of competitiveness
❖ From the 1990s: Resource-Based View (Barney)
- VRIN, tangible/Intangible resources
- Capabilities are firm-specific abilities to recombine resources
❖ From 2000s: Institution-based view (North, Scott, Peng)
- Scott: Institutions are the regulative, normative, and cognitive structures and activities
that provide stability and meaning to social behavior
❖ Semiglobalization and the notion of distance (Ghemawat)
❖ Integration/Responsiveness framework (Bartlett and Ghoshal)
❖ Liability of foreignness (Zaheer)
❖ Regional MNEs’ inclination (Rugman and Verbeke)
❖ Home country influences: National competitive advantage (Porter)
❖ Host country influences: Dunning’s four FDI motives
❖ International new ventures / Born globals
❖ Emerging Market Multinationals (EM MNEs)
3
, Art. 1.1 - The co-evolution of MNEs and the institutional environment -
Cantwell et al. (2010)
Role of institutions: Institutions play a determine role in shaping MNE activity and their decisions and
their international strategies. However, looking at institutional level may not be enough.
- Organization theory: adaptation/selection, isomorphism (coercive, mimetic and normative),
key concept of legitimacy
- Co-evolutionary theory: managerial firm level adaptation/macro level intentionality and
environmental selection occur simultaneously
→ Gaat erover dat er een combi is tussen institutional evolution (institutions) en active agency
(MNEs can somewhat alter institutions for a better fit)
→ North: economic history
→ Nelson: evolutionary economics
Key points: integrative framework combining firm-level adaptation, importance of informal
institutions, importance of co-evolutionary processes
MNE: Coordinated system or network of cross-border value-creating activities
Institutions: Patterns of human interaction that relate to the division of labor and the mode of
coordination of human activity. They are the formal rules (e.g., constitutions, laws and regulations)
and informal constraints (conventions, norms of behavior). They set the “the rules of the game”
→ “Non-ergodic world of continuous change” (North, 2005). North’s contribution is important, but he
largely ignores the firm-level processes of evolution.
Key point of paper: Understand that institutions play a determined role in shaping
multinational activities and decisions. MNEs have to do with a variety of institutions across
borders.
Only looking at institutional level may not be enough, that is a macro level approach.
Rules of the games: Formal (laws and regulations) and informal constraints (unwritten rules,
norms of behaviors)
3 aspects why role of institutions is important to discuss: (!!!)
1. The institutional aspects of the environment for IB activity have become steadily more
important for MNEs …” “These institutional aspects have also become increasingly
interconnected over geographical space”
2. The rising significance of non-ergodic uncertainty has placed more emphasis on the
development of new institutions that help better manage or reduce uncertainty in the course
of economic development. Experimentation is key (Institutional entrepreneurship)
3. MNEs have responded to this higher uncertainty shifting to more open business network
structures (MNEs as crucial actors of Institutional innovation)
Powell and DiMaggio’s seminal article
The notion of isomorphism. IB: shift from a view that emphasizes institutional embeddedness to one
that is focused on active agency. MNEs are confronted with institutional tensions more frequently than
are firms operating in a single country. Why?
→ IB activities can be asset/competence-exploiting or – creating. With the first it is the organizational
coherence and commonality that matters, with the second it is innovation, entrepreneurship and
variety that play a role.
4
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