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Using a 'Systems' Perspective to Explain the Limits of 'New' Multinational Enterprises: the role of 'members-only' location advantages

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  • Narula, Rajneesh

    () (J.H. Dunning Centre for International Business, Henley Business School)

Abstract

I take as a starting point that the location-specific assets of the home country determine to a significant degree firm-specific assets of its firms and MNEs. This strong bond persists because of the interdependence between actors within a system, which has a growing cross-border aspect due to globalization. I highlight the importance of institutions, not as a black box of rules, but as an invisible mesh that envelope, shape and constrain the actions of actors in a given system, and these actors are themselves - collectively and occasionally individually - responsible for the nature of institutions. I highlight that location advantages are not always freely available to all actors in a given location. There are important location advantages that are 'members-only' for which access is restricted to incumbents, and do not have a public good nature implied in the IB literature. This lies at the heart of the inertia of firms, and the difficulties of successfully leveraging location-bound assets in other countries, as well as the challenges of 'leaving home', since they may forfeit domestic 'membership' to do so. Home country L assets play a large part in defining EMNE FSAs, and where governments are unable to upgrade these (due to government failure or regulatory capture) it weakens the building block upon which sustainable outward FDI is possible.

Suggested Citation

  • Narula, Rajneesh, 2013. "Using a 'Systems' Perspective to Explain the Limits of 'New' Multinational Enterprises: the role of 'members-only' location advantages," MERIT Working Papers 033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2013033
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    File URL: https://www.merit.unu.edu/publications/wppdf/2013/wp2013-033.pdf
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    References listed on IDEAS

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    Keywords

    collocation; innovation systems; emerging countries; MNEs; institutions; globalization; location advantages;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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