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A test of internalization theory
Author(s) -
Rugman Alan M.
Publication year - 1981
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090020402
Subject(s) - multinational corporation , internalization , industrial organization , business , government (linguistics) , internalization theory , function (biology) , test (biology) , control (management) , economics , management , finance , paleontology , linguistics , philosophy , genetics , evolutionary biology , cell , biology
In a world system of natural and government induced market imperfections we have observed the development of the multinational enterprise as an efficient organizational response. The internal market of the multinational enterprise is the mechanism for the generation and use of its firm specific advantage. When this knowledge advantage has been fostered by Research and Development the multinational enterprise seeks to avoid its dissipation and generally prefers centralized control. This paper examines the implications of internalization theory for the Research and Development function. It tests for significant differences in Research and Development performed by parent, subsidiary and independent firms of similar size, using Canada as a case study.