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Is Competitive Advantage a Necessary Condition for the Emergence of the Multinational Enterprise?
Author(s) -
Hashai Niron,
Buckley Peter J.
Publication year - 2014
Publication title -
global strategy journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.814
H-Index - 24
eISSN - 2042-5805
pISSN - 2042-5791
DOI - 10.1111/j.2042-5805.2013.01069.x
Subject(s) - multinational corporation , counterintuitive , competitive advantage , argument (complex analysis) , business , disadvantaged , industrial organization , comparative advantage , international trade , economics , marketing , economic growth , philosophy , biochemistry , chemistry , finance , epistemology
This article challenges the view that competitive advantage is a necessary condition for the emergence of the multinational enterprise. It formally derives the conditions under which multinational enterprises may emerge without possessing a competitive advantage vis‐a‐vis their rivals. This counterintuitive argument is based on three insights: (1) the ability of a larger number of disadvantaged home country entrepreneurs to enroll workers in the host country more efficiently than a smaller number of advantaged host country entrepreneurs; (2) asymmetric liability of foreignness for home and host country entrepreneurs; and (3) the ability of location and internalization advantages to substitute for ownership advantage.