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

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