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Footloose multinationals: Extending the internalization theory
Author(s) -
Gokh Irina,
Filippaios Fragkiskos
Publication year - 2021
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.22193
Subject(s) - multinational corporation , divestment , internalization theory , business , restructuring , industrial organization , subsidiary , internalization , unbundling , context (archaeology) , economic geography , economics , paleontology , genetics , finance , biology , cell
Internalization theory explains how the multinational enterprise (MNE) makes decisions on new investments but does not explicitly address the restructuring (i.e., unbundling) processes that can take place within the MNE network of subsidiaries. Further extensions to internalization theory have considered the ways MNEs recombine, bundle, unbundle and orchestrate resources but have yet to address specifically the issue of divestments and relocations. We contribute to the literature by extending internalization theory through conceptualizing footloose behavior, a repeated relocation of divested operations over a period of time, and approaching MNEs behavior in a holistic way. Empirically, we use four case studies of mature, complex and diversified MNEs within the context of European Union (EU). These MNEs have engaged in several investments, divestments and relocations over several years. Through the analysis of their behavior we demonstrate how the inclusion of divestments and relocations can extend internalization theory in explaining the modern MNE.