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Searching for a dynamic theory of the multinational enterprise: A transaction cost model
Author(s) -
Hill Charles W. L.,
Kim W. Chan
Publication year - 1988
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250090710
Subject(s) - transaction cost , multinational corporation , corporate governance , perspective (graphical) , industrial organization , mode (computer interface) , business , database transaction , microeconomics , dynamic capabilities , economics , knowledge management , computer science , management , artificial intelligence , finance , programming language , operating system
Abstract This paper constructs a transaction cost model that provides an explanation for the transition between two distinct governance modes for serving a foreign market; a wholly owned subsidiary and licensing. The paper initially outlines a single‐period model of the factors that influence a firm's choice of governance mode. The model is then extended, first to incorporate a temporal perspective and then a dynamic perspective. The completed model identifies organizational and environmental contingencies that shape dynamic multi‐period decision‐making for the choice of governance mode.