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

  • Valeria Gattai

    (Università Bocconi, ISESAO)

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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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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