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AA00260492-19940002-0001.pdf
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Title |
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A RECONSIDERATION OF THE THEORY OF THE MULTINATIONAL CORPORATION
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HALLWOOD, C. Paul
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Department of Economics, University of Connecticut
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Keio Economic Society, Keio University
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1994
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Keio economic studies
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31
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2
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1994
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1
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11
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This paper considers what qualifications need to be made to the acknowledged market failure, or, internalization theory, of the multinational corporation. It is argued that acknowledged theory needs to be amended on two counts. First, drawing on the new 'resource view' of the firm, it argued that production cost differences and other competitive advantages possessed by firms can also explain the motivation to internationalize production. Secondly, utilizing the measurement cost theory of organizational design, it is argued that production may be internationalized purely in order to enhance market efficacy and not to replace arm's length markets through internalization.
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