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Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets

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  • Jean-Fran�ois Hennart

    (CentER and Department of Organization and Strategy, Tilburg University, The Netherlands)

Abstract

Both Anderson and Gatignon and the Uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises (MNEs) arbitraging control and risk and increasing their commitment as they gain experience in the target market. OLI and internalization models do recognize that foreign market entry requires the bundling of MNE and complementary local assets, which they call location or country-specific advantages, but implicitly assume that those assets are freely accessible to MNEs. In contrast to both of these MNE-centric views, I explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and MNEs. By looking at the relative efficiency of the different markets in which MNE and complementary local assets are traded, and at how these two categories of assets match, I am able to predict whether equity will be held by MNEs or by local firms, or shared between them, and whether MNEs will enter through greenfields, brownfields, or acquisitions. The bundling model I propose has interesting implications for the evolution of the MNE footprint in host countries, and for the reasons behind the emergence of Dragon MNEs.

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

Volume (Year): 40 (2009)
Issue (Month): 9 (December)
Pages: 1432-1454

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Handle: RePEc:pal:jintbs:v:40:y:2009:i:9:p:1432-1454

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Cited by:
  1. Gómez Plana, Antonio G. & Latorre, María C., 2013. "When multinationals leave: A CGE analysis of the impact of divestments," Economics Discussion Papers 2013-45, Kiel Institute for the World Economy.
  2. Julien Gooris & Carine Peeters, 2013. "Home-Host Country Distance in Offshore Governance Chocies," Working Papers ECARES ECARES 2013-13, ULB -- Universite Libre de Bruxelles.
  3. Jean, Ruey-Jer Bryan & Tan, Danchi & Sinkovics, Rudolf R., 2011. "Ethnic ties, location choice, and firm performance in foreign direct investment: A study of Taiwanese business groups FDI in China," International Business Review, Elsevier, vol. 20(6), pages 627-635.
  4. Christopher Melin, 2011. "Le management de projets des firmes multinationales comme un mécanisme de coordination des relations siège-filiales," Post-Print hal-00690839, HAL.
  5. Lusine Arzumanyan & Ulrike Mayrhofer & Christopher Melin, 2011. "Coordinating R&D activities in multinational companies: towards new tools and practices?," Post-Print halshs-00690220, HAL.
  6. Karhunen, Päivi & Ledyaeva, Svetlana, 2012. "Corruption Distance, Anti-corruption Laws and International Ownership Strategies in Russia," Journal of International Management, Elsevier, vol. 18(2), pages 196-208.
  7. Cesaroni, Fabrizio & Giarratana, Marco S. & Martínez-Ros, Ester, 2012. "Technological capabilities and cost efficiency as antecedents of foreign market entry," MERIT Working Papers 049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  8. Marlene Grande & Aurora A. C. Teixeira, 2011. "Linking entry mode choices of MNCs with countries’ corruption. A review," OBEGEF Working Papers 008, OBEGEF - Observatório de Economia e Gestão de Fraude & OBEGEF Working Papers on Fraud and Corruption.
  9. Jell-Ojobor, Maria & Windsperger, Josef, 2014. "The Choice of Governance Modes of International Franchise Firms — Development of an Integrative Model," Journal of International Management, Elsevier, vol. 20(2), pages 153-187.
  10. De Beule, Filip & Elia, Stefano & Piscitello, Lucia, 2014. "Entry and access to competencies abroad: Emerging market firms versus advanced market firms," Journal of International Management, Elsevier, vol. 20(2), pages 137-152.
  11. Eckert, Stefan & Dittfeld, Marcus & Muche, Thomas & Rässler, Susanne, 2010. "Does multinationality lead to value enhancement? An empirical examination of publicly listed corporations from Germany," International Business Review, Elsevier, vol. 19(6), pages 562-574, December.

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