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The Theory of the Transnational Corporation at 50+

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  • Grazia Ietto-Gillies

    (London South Bank University and Birkbeck University of London, UK)

Abstract

The paper briefly summarises the historical evolution of transnational corporations (TNCs) and their activities. It then introduces the major theories developed to explain the TNC. There is an attempt to place the theories historically, within the context of the socio-economic conditions and of the relevant economic ideas in which they were developed. The following theories are discussed: Hymer's, market power and control; Vernon's international product life cycle; the internalisation theory; Dunning's eclectic framework based on Ownership, Location, and Internalisation (OLI) advantages; The Scandinavian School; the evolutionary approaches of Cantwell and of Kogut and Zander; the New Trade theory applied to the TNC; the role of nation-states in the strategic behaviour of TNCs. There are some critical comments at the end of each presentation. A brief analysis of key elements in the theories, their differences and commonalities follows. It is pointed out that the pattern of development shows tensions between the following interconnected elements: (1) contents and methods of interest to Business Schools and to Economics Departments; (2) static versus dynamic approaches; (3) emphasis on efficiency versus strategic elements; (4) strategies towards rivals as well as towards other players in the economic system such as labour, governments and suppliers; (5) single- versus multi-disciplinary approaches; and micro versus macro approaches.

Suggested Citation

  • Grazia Ietto-Gillies, 2014. "The Theory of the Transnational Corporation at 50+," Economic Thought, World Economics Association, vol. 3(2), pages 1-38, September.
    • Handle: RePEc:wea:econth:v:3:y:2014:i:2:p:38
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    References listed on IDEAS

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    1. Hymer, Stephen, 1970. "The Efficiency (Contradictions) of Multinational Corporations," American Economic Review, American Economic Association, vol. 60(2), pages 441-448, May.
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    6. Peter J. Buckley & Mark Casson, 1991. "A Long-run Theory of the Multinational Enterprise," Palgrave Macmillan Books, in: The Future of the Multinational Enterprise, edition 0, chapter 2, pages 32-65, Palgrave Macmillan.
    7. James R. MARKUSEN, 2021. "Multinationals, Multi-Plant Economies, And The Gains From Trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
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    11. Grazia Ietto-Gillies, 2012. "Transnational Corporations and International Production," Books, Edward Elgar Publishing, number 14379.
    12. John Cantwell, 2014. "A commentary on Grazia Ietto-Gillies' paper: 'The Theory of the Transnational Corporation at 50+'," Economic Thought, World Economics Association, vol. 3(2), pages 1-58, September.
    13. John H. Dunning, 1977. "Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach," Palgrave Macmillan Books, in: Bertil Ohlin & Per-Ove Hesselborn & Per Magnus Wijkman (ed.), The International Allocation of Economic Activity, chapter 12, pages 395-418, Palgrave Macmillan.
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    16. Grazia Ietto-Gillies, 2014. "Reply to John Cantwell's Commentary on Grazia Ietto-Gillies' paper: 'The Theory of the Transnational Corporation at 50+'," Economic Thought, World Economics Association, vol. 3(2), pages 1-67, September.
    17. John H. Dunning & Sarianna M. Lundan, 2008. "Multinational Enterprises and the Global Economy, Second Edition," Books, Edward Elgar Publishing, number 3215.
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    21. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-471, June.
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    23. Cantwell, John, 1995. "The Globalisation of Technology: What Remains of the Product Cycle Model?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(1), pages 155-174, February.
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    2. Staritz, Cornelia & Frederick, Stacey, 2016. "Harnessing foreign direct investment for local development? Spillovers in apparel global value chains in sub-Saharan Africa," Working Papers 59, Austrian Foundation for Development Research (ÖFSE).
    3. Kateryna Zhylenko, 2017. "Investing And Production-Financial Activities Of Tncs' In The Conditions Of Globalization," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 3(4).
    4. Kicsi Rozalia & Burciu Aurel, 2019. "Inside The World – Class Multinationals: A Sectoral Frame," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 14(2), pages 73-87, August.

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