Why and how multinational enterprises can be value-creating organizations

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

Fingerprint

Multinational enterprises
Firm-specific advantages
Internalization
Equity
Assets
Internal market
Replacement

Cite this

@article{3fbb022ab89043d4924b120fb9875d9e,
title = "Why and how multinational enterprises can 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.",
author = "J.M.A. Hennart",
year = "2015",
language = "English",
volume = "50",
pages = "623--626",
journal = "Journal of World Business",
issn = "1090-9516",
publisher = "Elsevier Science Inc.",
number = "4",

}

Why and how multinational enterprises can be value-creating organizations. / Hennart, J.M.A.

In: Journal of World Business, Vol. 50, No. 4, 2015, p. 623-626.

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

TY - JOUR

T1 - Why and how multinational enterprises can be value-creating organizations

AU - Hennart, J.M.A.

PY - 2015

Y1 - 2015

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.

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.

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 -