Commentary

Why and how can Multinational Enterprises be value-creating organizations?

Jean-Francois Hennart*

*Corresponding author for this work

Research output: Contribution to journalComment/Letter to the editorScientificpeer-review

Abstract

Rugman made the valid point that Multinational Enterprises are value-creating organizations but in this piece I question his explanation of why this is the case. I argue that it is not, as Rugman proposed, because MNEs are better at safeguarding their firm-specific advantages (FSAs) but because having them hold the equity is sometimes the most efficient way to bundle assets. I present a more general model of internalization that shows why MNEs can be the most efficient way to both exploit and acquire FSAs, why a firm does not need to have FSAs to become an MNE, and why internalization is not a question of setting up internal markets but consists instead in the replacement of output by behavior constraints. (C) 2015 Elsevier Inc. All rights reserved.

Original languageEnglish
Pages (from-to)623-626
Number of pages4
JournalJournal of World Business
Volume50
Issue number4
DOIs
Publication statusPublished - Oct 2015

Keywords

  • TRANSACTION COST
  • MARKET

Cite this

@article{e248834fa0774483bb33d4c39a511b89,
title = "Commentary: Why and how can Multinational Enterprises be value-creating organizations?",
abstract = "Rugman made the valid point that Multinational Enterprises are value-creating organizations but in this piece I question his explanation of why this is the case. I argue that it is not, as Rugman proposed, because MNEs are better at safeguarding their firm-specific advantages (FSAs) but because having them hold the equity is sometimes the most efficient way to bundle assets. I present a more general model of internalization that shows why MNEs can be the most efficient way to both exploit and acquire FSAs, why a firm does not need to have FSAs to become an MNE, and why internalization is not a question of setting up internal markets but consists instead in the replacement of output by behavior constraints. (C) 2015 Elsevier Inc. All rights reserved.",
keywords = "TRANSACTION COST, MARKET",
author = "Jean-Francois Hennart",
year = "2015",
month = "10",
doi = "10.1016/j.jwb.2015.08.004",
language = "English",
volume = "50",
pages = "623--626",
journal = "Journal of World Business",
issn = "1090-9516",
publisher = "Elsevier Science Inc.",
number = "4",

}

Commentary : Why and how can Multinational Enterprises be value-creating organizations? / Hennart, Jean-Francois.

In: Journal of World Business, Vol. 50, No. 4, 10.2015, p. 623-626.

Research output: Contribution to journalComment/Letter to the editorScientificpeer-review

TY - JOUR

T1 - Commentary

T2 - Why and how can Multinational Enterprises be value-creating organizations?

AU - Hennart, Jean-Francois

PY - 2015/10

Y1 - 2015/10

N2 - Rugman made the valid point that Multinational Enterprises are value-creating organizations but in this piece I question his explanation of why this is the case. I argue that it is not, as Rugman proposed, because MNEs are better at safeguarding their firm-specific advantages (FSAs) but because having them hold the equity is sometimes the most efficient way to bundle assets. I present a more general model of internalization that shows why MNEs can be the most efficient way to both exploit and acquire FSAs, why a firm does not need to have FSAs to become an MNE, and why internalization is not a question of setting up internal markets but consists instead in the replacement of output by behavior constraints. (C) 2015 Elsevier Inc. All rights reserved.

AB - Rugman made the valid point that Multinational Enterprises are value-creating organizations but in this piece I question his explanation of why this is the case. I argue that it is not, as Rugman proposed, because MNEs are better at safeguarding their firm-specific advantages (FSAs) but because having them hold the equity is sometimes the most efficient way to bundle assets. I present a more general model of internalization that shows why MNEs can be the most efficient way to both exploit and acquire FSAs, why a firm does not need to have FSAs to become an MNE, and why internalization is not a question of setting up internal markets but consists instead in the replacement of output by behavior constraints. (C) 2015 Elsevier Inc. All rights reserved.

KW - TRANSACTION COST

KW - MARKET

U2 - 10.1016/j.jwb.2015.08.004

DO - 10.1016/j.jwb.2015.08.004

M3 - Comment/Letter to the editor

VL - 50

SP - 623

EP - 626

JO - Journal of World Business

JF - Journal of World Business

SN - 1090-9516

IS - 4

ER -