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An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment

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Author Info

  • John Cantwell

    (Department of Management & Global Business, Rutgers Business School, Rutgers University, Newark, USA)

  • John H Dunning

    (Department of Economics, University of Reading, Reading, UK)

  • Sarianna M Lundan

    (Department of Organization and Strategy, School of Business and Economics, Maastricht University, Maastricht, The Netherlands)

Abstract

This paper examines the co-evolution of MNE activities and institutions external and internal to the firm. We develop a theoretical framework for this analysis that draws on the more recent writings of Douglass North on institutions as a response to complex forms of uncertainty associated with the rise in global economic interconnectedness, and of Richard Nelson on the co-evolution of technology and institutions. We link historical changes in the character of MNE activities to changes in the institutional environment, and highlight the scope for firm-level creativity and institutional entrepreneurship that may lead to co-evolution with the environment. We argue that the main drivers for institutional entrepreneurship are now found in the increasing autonomy of MNE subsidiaries. Thus MNE agency derives from more decentralized forms of experimentation in international corporate networks, which competence-creating nodes of new initiatives can co-evolve with local institutions. Unlike most other streams of related literature, our approach connects patterns of institutional change in wider business systems with more micro processes of variety generation and experimentation within and across individual firms. This form of co-evolutionary analysis is increasingly important to understanding the interrelationships between MNE activities and public policy.

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Bibliographic Info

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

Volume (Year): 41 (2010)
Issue (Month): 4 (May)
Pages: 567-586

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Handle: RePEc:pal:jintbs:v:41:y:2010:i:4:p:567-586

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Cited by:
  1. Martin, Xavier, 2013. "Solving theoretical and empirical conundrums in international strategy research by matching foreign entry mode choices and performance," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-5637252, Tilburg University.
  2. Stoian, Carmen, 2013. "Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment," International Business Review, Elsevier, Elsevier, vol. 22(3), pages 615-637.
  3. Denk, Nikola & Kaufmann, Lutz & Roesch, Jan-Frederik, 2012. "Liabilities of Foreignness Revisited: A Review of Contemporary Studies and Recommendations for Future Research," Journal of International Management, Elsevier, Elsevier, vol. 18(4), pages 322-334.
  4. Wang, Danny T. & Gu, Flora F. & Tse, David K. & Yim, Chi Kin (Bennett), 2013. "When does FDI matter? The roles of local institutions and ethnic origins of FDI," International Business Review, Elsevier, Elsevier, vol. 22(2), pages 450-465.
  5. Buczkowski Bogdan, 2013. "Poland`S Outward Foreign Direct Investment," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 72-81, July.
  6. Giulio Pedrini, 2011. "Personnel policies in the European firms: some evidence of the existing model(s) and the potential role of Corporate Universities," Working Papers, AlmaLaurea Inter-University Consortium 22, AlmaLaurea Inter-University Consortium.
  7. Jonatan Pinkse & Ans Kolk, 2012. "MNES and climate change : exploring institutional failures and embeddedness," Grenoble Ecole de Management (Post-Print), HAL hal-00707360, HAL.
  8. Poulis, Konstantinos & Poulis, Efthimios & Plakoyiannaki, Emmanuella, 2013. "The role of context in case study selection: An international business perspective," International Business Review, Elsevier, Elsevier, vol. 22(1), pages 304-314.
  9. DÖRRY Sabine, 2012. "Luxembourg's specialisation as a financial centre within the global value networks of investment funds," CEPS/INSTEAD Working Paper Series 2012-40, CEPS/INSTEAD.
  10. White, George O. & Hadjimarcou, John & Fainshmidt, Stav & Posthuma, Richard A., 2013. "MNE home country cultural norms and conflict strategy fit in transnational business contract disputes," International Business Review, Elsevier, Elsevier, vol. 22(3), pages 554-567.
  11. Pitelis, Christos & Teece, David, 2010. "Cross-border Market Co-creation, Dynamic Capabilities and the Entrepreneurial Theory of the Multinational Enterprise," MPRA Paper 23301, University Library of Munich, Germany.
  12. Hatani, Faith & McGaughey, Sara L., 2013. "Network cohesion in global expansion: An evolutionary view," Journal of World Business, Elsevier, Elsevier, vol. 48(4), pages 455-465.
  13. Zhang, Jianhong & He, Xinming, 2014. "Economic nationalism and foreign acquisition completion: The case of China," International Business Review, Elsevier, Elsevier, vol. 23(1), pages 212-227.
  14. Peng, Mike W. & Su, Weichieh, 2014. "Cross-listing and the scope of the firm," Journal of World Business, Elsevier, Elsevier, vol. 49(1), pages 42-50.
  15. Federico Barbiellini Amidei & John Cantwell & Anna Spadavecchia, 2011. "Innovation and Foreign Technology in Italy,1861-2011," Quaderni di storia economica (Economic History Working Papers), Bank of Italy, Economic Research and International Relations Area 07, Bank of Italy, Economic Research and International Relations Area.

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