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Testing the bargaining hypothesis in the manufacturing sector in developing countries

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Author Info
Kobrin, Stephen J.
Abstract

The bargaining power model of HC multinational corporation) interaction conceives of economic nationalism in terms of rational self-interest and assumes both inherent conflict and convergent objectives. In extractive industries, there is strong evidence that outcomes are a function of relative bargaining power and that as power shifts to developing HCs over time, the bargain obsolesces. A cross-national study of the bargaining model, using data from 563 subsidiaries of U.S. manufacturing firms in forty-nine developing countries, indicates that while the bargaining framework is an accurate model of MNC host country relationships, manufacturing is not characterized by the inherent, structurally based, and secular obsolescence that is found in the natural resource industries. Shifts in bargaining power to HCs may take place when technology is mature and global integration limited. In industries characterized by changing technologies and the spread of global integration, the bargain will obsolesce very slowly and the relative power of MNCs may even increase over time.

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Publisher Info
Article provided by Cambridge University Press in its journal International Organization.

Volume (Year): 41 (1987)
Issue (Month): 04 (September)
Pages: 609-638
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:cup:intorg:v:41:y:1987:i:04:p:609-638_02

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  5. Monika Schnitzer, 1995. "Debt versus Foreign Direct Investment: The Impact of Sovereing Risk on the Structure of Capital Flows to Developing Countries," Discussion Paper Serie A 484, University of Bonn, Germany. [Downloadable!]
  6. Vaaler, Paul M., 2006. "Electoral Politics and Foreign Project Investment in Developing Countries," Working Papers 06-0125, University of Illinois at Urbana-Champaign, College of Business. [Downloadable!]
  7. Yasheng Huang, 2001. "Why More is Actually Less: New Interpretations of China's Labor-Intensive FDI," William Davidson Institute Working Papers Series 375, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  8. Yasheng Huang & Wenhua Di, 2004. "A Tale of Two Provinces: The Institutional Environment and Foreign Ownership in China," William Davidson Institute Working Papers Series 2004-667, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  9. Yasheng Huang, 2001. "Economic Fragmentation and FDI in China," William Davidson Institute Working Papers Series 374, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  10. Muller, A.R. & Tulder, R.J.M. van, 2005. "The Search for Synergy between Institutions and Multinationals: Institutional Uncertainty and Patterns of Internationalization," Research Paper ERS-2005-086-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
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