Multinationals And Industrial Competitiveness: A New Agenda (New Horizons in International Business Series)

297 Pages·2005·1.14 MB·English

by  John H. Dunning

Multinationals and Industrial Competitiveness
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NEW HORIZONS IN INTERNATIONAL BUSINESS
Series Editor: Peter J. Buckley
Centre for International Business,
University of Leeds (CIBUL), UK
The New Horizons in International Business series has established itself as the world’s
leading forum for the presentation of new ideas in international business research. It offers
pre-eminent contributions in the areas of multinational enterprise – including foreign direct
investment, business strategy and corporate alliances, global competitive strategies, and
entrepreneurship. In short, this series constitutes essential reading for academics, business
strategists and policy makers alike.
Titles in the series include:
The New Economic Analysis of Multinationals
An Agenda for Management, Policy and Research
Edited by Thomas L. Brewer, Stephen Young and Stephen E. Guisinger
Transnational Corporations, Technology and Economic Development
Backward Linkages and Knowledge Transfer in South East Asia
Axèle Giroud
Alliance Capitalism for the New American Economy
Edited by Alan M. Rugman and Gavin Boyd
Alliance Capitalism and Corporate Management
Entrepreneurial Cooperation in Knowledge Based Economies
Edited by John H. Dunning and Gavin Boyd
The Structural Foundations of International Finance
Problems of Growth and Stability
Edited by Pier Carlo Padoan, Paul A. Brenton and Gavin Boyd
The New Competition for Inward Investment
Companies, Institutions and Territorial Development
Edited by Nicholas Phelps and Phil Raines
Multinational Enterprises, Innovative Strategies and Systems of Innovation
Edited by John Cantwell and José Molero
Multinational Firms' Location and the New Economic Geography
Edited by Jean-Louis Mucchielli and Thierry Mayer
Free Trade in the Americas
Economic and Political Issues for Governments and Firms
Edited by Sidney Weintraub, Alan M. Rugman and Gavin Boyd
Economic Integration and Multinational Investment Behaviour
European and East Asian Experiences
Edited by Pierre-Bruno Ruffi ni
Strategic Business Alliances
An Examination of the Core Dimensions
Keith W. Glaister, Rumy Husan and Peter J. Buckley
Investment Strategies in Emerging Markets
Edited by Saul Estrin and Klaus E. Meyer
Multinationals and Industrial Competitiveness
A New Agenda
John H. Dunning and Rajneesh Narula
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Multinationals
and Industrial
Competitiveness
A New Agenda
John H. Dunning
Emeritus Esmée Fairbairn Professor of International
Investment and Business Studies, University of Reading, UK
and Emeritus State of New Jersey Professor of International
Business, Rutgers University, US
and
Rajneesh Narula
Professor of International Business Regulation, University of
Reading, UK
NEW HORIZONS IN INTERNATIONAL BUSINESS
Edward Elgar
Cheltenham, UK (cid:127) Northampton, MA, USA
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© John H. Dunning and Rajneesh Narula 2004
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system or transmitted in any form or by any means, electronic,
mechanical or photocopying, recording, or otherwise without the prior
permission of the publisher.
Published by
Edward Elgar Publishing Limited
Glensanda House
Montpellier Parade
Cheltenham
Glos GL50 1UA
UK
Edward Elgar Publishing, Inc.
136 West Street
Suite 202
Northampton
Massachusetts 01060
USA
A catalogue record for this book
is available from the British Library
ISBN 1 84376 686 8
Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall
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Contents
List of fi gures vi
List of tables vii
Acknowledgments ix
1 The multinational enterprise, industrial development and policy:
an introduction to the primary themes of this volume 1
PART I MNES AND INDUSTRIAL DEVELOPMENT:
ISSUES CONFRONTING DEVELOPING COUNTRIES
2 Developing countries versus multinationals in a globalizing
world: the dangers of falling behind 13
3 Industrial development, globalization and multinational
enterprises: new realities for developing countries 38
4 Incorporating trade into the investment development path 71
5 Multinational fi rms, regional integration and globalizing markets 98
PART II R&D, ALLIANCES AND DEVELOPED COUNTRIES
6 Explaining international R&D alliances and the role of
governments 129
7 Explaining strategic R&D alliances of European fi rms 153
8 R&D collaboration by ‘stand-alone’ SMEs: opportunities and
limitations in the ICT sector 175
PART III FDI AND COMPETITIVENESS
9 Relational assets: the new competitive advantages of MNEs
and countries 201
10 Regaining competitiveness for Asian enterprises 242
11 The role of foreign direct investment in upgrading China’s
competitiveness 260
Index 273
v
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Figures
3.1 Host countries and MNEs: a static view of bargaining issues 42
3.2 Changing bargaining positions between groups of countries 44
3.3 Primary relationships underlying the investment
development path 45
4.1 Four stages in the IDPs and TDPs of industrializing
developing countries 75
5.1 Typology of MNE subsidiaries 109
5.2 Different combinations of regional integrations 112
6.1 Relating globalization to the motives for strategic alliances 133
7.1 Number of new STP per year by EU fi rms, 1980–94 164
7.2 STP by EU fi rms, by core sectors and regional groupings 167
8.1 Technological evolution with a given paradigm 182
8.2 Types of SMEs at different stages of an industry’s evolution 183
8.3 Distribution of competencies of an ICT fi rm, based on
managers’ perceptions 188
9.1 The pyramid of corporate assets (at the individual fi rm level) 206
9.2 Types of R-assets 212
11.1 Linking the role of FDI to the main facets of competitive
advantages 263
11.2 Four stages in the IDPs and TDPs of industrializing
developing countries 266
vi
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Tables
2.1 Selected indicators of FDI and international production,
1986–95 17
2.2 Signifi cance of regions in world GDP and inward FDI stocks,
1980 and 1993 19
3.1 Changes in GDP and inward FDI stock per capita,
1980 and 1995: evidence of divergence 47
3.2 The changing nature of the world economic environment
and the opportunity sets of MNEs 54
3.3 The changing nature of the world economic environment
and the opportunity sets of host countries 56
4.1 The FDI intensity of Korean and Taiwanese imports and
exports and GNP per capita 77
4.2 Proportion of A, O and B-type imports and exports as a
percentage of total imports and exports 80
4.3 Inward and outward direct investment and GNP per capita 82
4.4 Proportion of IDI and ODI accounted for by FDI-intensive
sectors 84
4.5 Proportion of A, O and B-type FDI as a percentage of
total FDI 86
4.6 The FDI-intensity of Korean and Taiwanese trade and
FDI (I) 88
4.7 The FDI-intensity of Korean and Taiwanese trade and
FDI (II) 89
4.8 Intra-industry trade and FDI 90
7.1 Strategic technology partnering by the three largest EU
countries 165
8.1 Some basic indicators 189
8.2 The importance of different R&D motivations for ICT fi rms 193
8.3 R&D activities that fi rms prefer to undertake with partners 193
9.1 Three kinds of assets available to MNEs or potential MNEs 202
9.2 The changing characteristics of (productive) assets 203
9.3 Some unique characteristics of fi rm-specifi c R-assets 207
9.4 Selected ingredients of R-assets; how their signifi cance might
vary according to the activities of fi rms 210
vii
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viii Tables
9.5 Some measures of R-assets (or liabilities) 215
9.6 Why have R-assets become more important over the last two
decades? 218
9.7 R-assets, OLI and some contextual situations 226
9.8 Implications of the growing signifi cance of R-assets 231
10.1 Host-country determinants of FDI 248
10.2 Relative strengths and weaknesses of Asian and Western
countries over which governments may have some infl uence 253
10.3 Relative strengths and weaknesses of management as
identifi ed by World Competitive Yearbook 256
11.1 Relating host country determinants to motives and
determinants of FDI 269
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Acknowledgments
This volume owes much to so many. Each chapter has gone through a
serpentine voyage through many a draft to get here, and on the way has
benefi ted from the assistance, advice or comments of many people. To the
following people we are certain that we owe a general debt of gratitude:
Christine Dunning, H. Peter Gray, John Hagedoorn, Lynn Mytelka, Sanjaya
Lall, Luc Soete, Lou Anne Barclay and Jan Fagerberg. Alas, our memories
are not quite what they used to be, so if we inexplicably fail to mention
certain names, it is without malice or evil intent.
Chapter 4 was originally co-authored with Chang-Su Kim and Jyh-
Der Lin. We are grateful for their permission to use this co-authored
material here. Gratitude for administrative and secretarial support goes
to Jill Turner at Reading University, Nevena Yakova and Phyllis Miller
at Rutgers University and Karen Pallisgaard at the Copenhagen Business
School. Special mention must be made of the general editorial assistance
that Sudha Menon has provided.
Acknowledgment is also due to the copyright holders for permission
to reprint the following. Chapter 2 is a revised version of ‘Developing
countries versus multinationals in a globalising world: the dangers of
falling behind’, which appeared in Forum for Development Studies, 1999,
(2), pp. 261–87. Chapter 3 is based on a paper that originally appeared
as ‘Industrial development, globalisation and multinational enterprises:
new realities for developing countries’, Oxford Development Studies, vol.
28, no. 2, 2000. Chapter 4 was originally published as chapter 7 under the
same title in R. Narula (ed.), Trade and Investment in a Globalising World,
Oxford: Pergamon Press. Chapter 5 was published as ‘Regional integration
and the strategies of multinational firms’, in Trade and Regional Integration
in the Development Agenda, Washington, DC: IDB, 2002. Chapter 6 is a
revised version of ‘Explaining international R&D alliances and the role of
governments’, International Business Review, vol. 7, pp. 377–97, 1998.
Chapter 7 is based on ‘Explaining strategic R&D alliances by European
firms’, Journal of Common Market Studies, vol. 37, pp. 711–23, 1999.
Chapter 8 is based on ‘R&D collaboration by SMEs: new opportunities
and limitations in the face of globalisation’, Technovation, 2004, vol. 24,
pp. 153–61. Chapter 9 is an extended version of ‘Relational assets: the new
ix
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x Acknowledgments
competitive advantages of MNEs and countries’, in F. Contractor and
P. Lorange (eds), Cooperative Strategies and Alliances, Oxford: Pergamon
Press, 2002. Chapter 10 is based on ‘Regaining competitiveness for Asian
enterprises’, Journal of International Business and Economy, vol. 1, 2000.
Chapter 11 is based on ‘The role of foreign direct investment in upgrading
China’s competitiveness’, Journal of International Business and Economy,
vol. 3, 2003.
All errors remain our own.
Rajneesh Narula and John Dunning
Copenhagen and Henley-on-Thames
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