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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. 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.
  2. Valeria Gattai, 2010. "Firm's intangible assets and multinational activity: Full versus shared ownership," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 19(4), pages 553-589.
  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. Naghavi, Alireza & Ottaviano, Gianmarco Ireo Paolo, 2006. "Outsourcing, Contracts and Innovation Networks," CEPR Discussion Papers 5681, C.E.P.R. Discussion Papers.
  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. Valeria Gattai, 2013. "International outsourcing versus FDI under contractual incompleteness," International Review of Economics, Springer, vol. 60(2), pages 157-186, June.

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