The transformation of multinational corporations (MNCs) from an innovation perspective: some notes on the theories of MNCs

Abstract

MNCs have a long history of evolution. A hundred years of internationalization process has transformed MNC greatly due to the evolution of the motives and the way companies integrate and expand their business around the world. Rapid liberalization, globalization and technological change especially in information and communication technology (ICT) sector have again revolutionized the transformation of the MNCs even further. As a consequence, the traditional version of the ownership-specific, localization and internalization advantages O.L.I) paradigm and recent new theories of the MNCs are inadequate to explain the dynamics and the growing of the MNCs from developed and emerging economies. This paper argues that the traditional International Business Theories of MNCs should seek cooperation from an innovation perspective approach such as Rothwell's five generations of innovation process and open innovation approach proposed by Chesbrough in order to strengthen the theories of MNCs. Since both approaches emphasize the role of external factors such as the role of knowledge, expertise, university and networks which are lacking in the traditional resource-based theory. The combination of O.L.I paradigm and innovation approaches will certainly strengthen the capability of the MNCs theories to generalize about how MNCs from emerging economies are similar and dissimilar to more traditional MNCs from developed countries in the era of rapid globalization.