Table Of ContentThe New Economic Analysis of Multinationals
NEWHORIZONS IN INTERNATIONALBUSINESS
Series Editor: PeterJ. 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 European Union and Globalisation
Towards Global Democratic Governance
Brigid Gavin
Globalization and the Small Open Economy
Edited by Daniel Van Den Bulcke and Alain Verbeke
Entrepreneurship and the Internationalisation of Asian Firms
An Institutional Perspective
Henry Wai-chung Yeung
The World Trade Organization in the New Global Economy
Trade and Investment Issues in the Millennium Round
Edited by Alan M. Rugman and Gavin Boyd
Japanese Subsidiaries in the New Global Economy
Edited by Paul W. Beamish, Andrew Delios and Shige Makino
Globalizing Europe
Deepening Integration, alliance Capitalism and Structural Statecraft
Edited by Thomas L. Brewer, Paul A. Brenton and Gavin Boyd
China and its Regions
Economic Growth and Reform in Chinese Provinces
Edited by Mary-Françoise Renard
Emerging Issues in International Business Research
Edited by Masaaki Kotabe and Preet S. Aulakh
Network Knowledge in International Business
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Learning in the Internationalisation Process of Firms
Edited by Anders Blomstermo and D. Deo Sharma
Alliance Capitalism and Corporate Management
Entrepreneurial Cooperation in Knowledge Based Economies
Edited by John H. Dunning and Gavin Boyd
The New Economic Analysis of Multinationals
An Agenda for Management, Policy and Research
Edited by Thomas L. Brewer, Stephen Young and Stephen E. Guisinger
The New Economic
Analysis of
Multinationals
An Agenda for Management, Policy
and Research
Edited by
Thomas L. Brewer
Faculty, Georgetown University McDonough School of
Business, Washington, DC, USA
Stephen Young
Professor and Director, Strathclyde International Business Unit,
University of Strathclyde, Glasgow, UK
Stephen E. Guisinger
Formerly Professor of International Management,
University of Texas, Dallas, USA
NEWHORIZONS IN INTERNATIONALBUSINESS
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
©Thomas L. Brewer, Stephen Young and Stephen E. Guisinger 2003
All rights reserved. No part of this publication may be reproduced, stored in
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mechanical or photocopying, recording, or otherwise without the prior permission
of the publisher.
Published by
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Edward Elgar Publishing, Inc.
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Acatalogue record for this book
is available from the British Library
Library of Congress Cataloguing in Publication Data
The new economic analysis of multinationals: an agenda for management, policy, and
research/edited by Thomas L. Brewer, Stephen Young, Stephen E. Guisinger.
p. cm.—(New horizons in international business series)
Based on a symposium held in 1998.
Includes bibliographical references and index.
1. International business enterprises—Management. 2. International business
enterprises. I. Brewer, Thomas L., 1941– II. Young, Stephen, 1944– III.
Guisinger, Stephen E. IV. New horizons in international business.
HD62.4.N483 2003
338.8′8—dc21 2002037943
ISBN 1 84064 154 1
Typeset by Cambrian Typesetters, Frimley, Surrey
Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall
Contents
List of figures vi
List of tables vii
List of contributors viii
Dedication ix
Introduction by Stephen E. Guisinger, Thomas L. Brewer and
Stephen Young x
1 Research on international business: problems and prospects 1
Richard E. Caves
2 Models of the multinational enterprise 17
Peter J. Buckley and Mark C. Casson
3 Location and the multinational enterprise: a neglected factor? 45
John H. Dunning
4 Market structure and the multinational enterprise:
a game-theoretic approach 70
Edward M. Graham
5 Multinational enterprise and economic analysis: technology
and productivity 91
Sylvia Ostry
6 Multinationals and the developing countries 106
Louis T. Wells, Jr
7 Multinational enterprises and public policy 122
Alan M. Rugman and Alain Verbeke
8 Overview and public policy reflections 145
Stephen Young and Thomas L. Brewer
Index 171
v
Figures
7.1 The consistency between MNE and home and host
government goals 126
7.2 Institutional determinants of MNE-government interactions 128
7.3 MNE’s strategic approach to government policy 130
7.1A Examples of Figure 7.1 132
7.2A Examples of Figure 7.2 135
7.3A Examples of Figure 7.3 137
vi
Tables
I.1 The evolving research agenda: illustrative topics xi
3.1 Some variables influencing the location of value-added
activities by MNEs in the 1970s and 1990s 54
4.1 Effects on rhoAof changes in C and C (D = D = 100,
A B A B
m = m ) 82
A B
4.2 Effects on rhoAof changes in C and C (D = D = 100,
A B A B
m = 0.25 m ) 83
A B
4.3 Effects on rhoAof changes in C and C (D = D = 100,
A B A B
m = 4 m ) 83
A B
4.4 Effects on rhoAof changes in C and C (D = 100, D = 1000,
A B A B
m = m ) 84
A B
vii
Contributors
Thomas L. Brewer, former Editor of the Journal of International Business
Studies, and Associate Professor, McDonough School of Business,
Georgetown University, Washington, DC, USA
Peter J. Buckley, Professor of International Business and Director of the
Centre for International Business, University of Leeds (CIBUL), UK
Mark C. Casson, Professor of Economics, University of Reading, UK
Richard E. Caves, Nathaniel Ropes Professor of Political Economy,
Department of Economics, Harvard University, Cambridge, Massachusetts,
USA
John H. Dunning, Emeritus Professor of International Business, University of
Reading, UK, and Emeritus Professor of International Business, Rutgers
University, USA
Edward M. Graham, Senior Fellow, Institute for International Economics,
Washington, DC, USA
Stephen E. Guisinger, formerly Professor of International Management,
University of Texas at Dallas, USA
Sylvia Ostry, Distinguished Research Fellow, Centre for International Studies,
University of Toronto, Toronto, Canada
Alan M. Rugman, Leslie Waters Chair of International Business, Kelley
School of Business, Indiana University, USA and Thames Water Senior
Research Fellow, Templeton College, University of Oxford, UK
Alain Verbeke, Professor of International Business and Public Policy, Solvay
Business School, University of Brussels (VUB), Belgium, and Associate
Fellow, Templeton College, University of Oxford, UK
Louis T. Wells, Jr, Herbert F. Johnson Professor of International Management,
Harvard Business School, Cambridge, Massachusetts, USA
Stephen Young, Director, Strathclyde International Business Unit, University
of Strathclyde, UK
viii
Dedication
This book is dedicated to the memory of Professor Stephen Guisinger, a good
friend and collaborator, who died in Dallas, Texas on 3 July 2001. He inspired
and co-edited the symposium in the Journal of International Business Studies
on ‘Multinational Enterprise and Economic Analysis’(volume 29, number 1),
on which this book is based.
Steve enjoyed a distinguished career as a scholar and teacher of interna-
tional business, and he was active in governmental policy-making circles as a
specialist in foreign direct investment issues and business–government rela-
tions. His publications included articles in JIBSin 1989, 1991, 1992, 1995 and
1998. He had recently begun working on an international business textbook
based on his analytic framework emphasizing the interactions of firms with
their political–economic environments. He worked with numerous doctoral
students in his career, and was always a strong supporter of them during and
after their studies. Perhaps less known to members of the AIB were his profes-
sional activities on government policy issues – for instance, as a frequent
consultant to the World Bank on foreign direct investment issues, particularly
in Asia. He was also directly involved in drafting the Asia Pacific Economic
Cooperation (APEC) code on foreign direct investment.
Steve had been robust – and energetically looking forward to the future –
until a few days before his death. Many of us will continue to be inspired by
his example.
ix
