The evolutionary view of the MNE and the future of internalization theory

Abstract

Kogut and Zander's 1993 JIBS article, which developed an evolutionary perspective on the multinational enterprise (MNE), has had three critical impacts on MNE research. First, it has stimulated scholars to conduct more eclectic, empirical analyses, which should include both transaction cost related parameters, and broader learning/competence related variables. Second, it has usefully argued that the rigorous study of MNE behavior does not need to reply upon the Williamsonian, behavioral assumption of opportunism. Third, it has (implicitly) suggested a new path to be followed by internalization theory scholars, in order to remain relevant to the field of international business. The transaction cost economics lens adopted in internalization theory clearly remains critical to any analysis of MNE strategy with impacts on the boundaries of the firm. In addition, the co-evolution of the MNE's governance structure and its technological competences determines present and future strategy choices. Here, both transaction cost considerations and learning effects influence strategy selection.