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From the Theory of the Firm to FDI and Internalisation: A Survey

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  • Valeria Gattai

    (Università Bocconi, ISESAO)

Abstract

This paper surveys recent contributions on the Internalisation issue, based on different theories of the firm, to show how the make-or-buy decision, at an international level, has been assessed through the opening up of the “black box” - traditionally explored by the theorists of the firm – and the simultaneous endogenization of the market environment – as in the International Economics tradition. In particular, we consider three Archetypes – Grossman-Hart-Moore treatment of hold-up and contractual incompleteness, Holmstrom-Milgrom view of the firm as an incentive system, Aghion-Tirole conceptualisation of formal and real authority in organisations – and show how they have been embedded in industry and general equilibrium models of FDI to explain the boundaries of global firms.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2005.51.

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Date of creation: Apr 2005
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Handle: RePEc:fem:femwpa:2005.51

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Keywords: FDI; Internalisation; International Economics; Incomplete contracts;

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References

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Citations

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Cited by:
  1. Naghavi, Alireza & Ottaviano, Gianmarco Ireo Paolo, 2006. "Outsourcing, Contracts and Innovation Networks," CEPR Discussion Papers 5681, C.E.P.R. Discussion Papers.
  2. Valeria Gattai, 2013. "International Outsourcing versus FDI under Contractual Incompleteness," Working Papers 237, University of Milano-Bicocca, Department of Economics, revised Mar 2013.
  3. Butter, Frank A.G. den & Wit, Paul, 2006. "Trade and product innovations as sources for productivity increases: an empirical analysis," Serie Research Memoranda 0013, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  4. Valeria Gattai, 2009. "Firm’s intangible assets and multinational activity: full versus shared ownership," Working Papers 154, University of Milano-Bicocca, Department of Economics, revised Feb 2009.
  5. Lorenzo Casaburi & Valeria Gattai, 2009. "Why FDI? An Empirical Assessment Based on Contractual Incompleteness and Dissipation of Intangible Assets," Working Papers 164, University of Milano-Bicocca, Department of Economics, revised Jul 2009.
  6. Chaihuaque, Bruno, 2009. "El enfoque transaccional en los límites de la empresa
    [The transactional approach in company boundaries]
    ," MPRA Paper 41297, University Library of Munich, Germany, revised 16 Jul 2009.

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