Emerging Issues in International Business Research

Emerging Issues in International Business Research

New Horizons in International Business series

Edited by Masaaki Kotabe and Preet S. Aulakh

Top scholars in the field of international business (IB) contribute to this comprehensive analysis of the current state-of-the-art in IB research. The focus of the book is to examine the current state of international business research from an issue-oriented approach rather than the functional approaches that have been characteristic in the recent evolution of the field. In evaluating the current state and future research directions in research areas unique to international business, the book is structured in three parts: the macro-environment, interactions between business and institutions, and competition and strategy.

Chapter 8: Industrial Endowments in International Business: An Analytical Framework

Yadong Luo

Subjects: business and management, international business


8. Industrial endowments in international business: an analytical framework Yadong Luo INTRODUCTION Globalization has become a permanent and irreversible part of economic life. It provides firms with both tremendous opportunities and daunting challenges. International expansion has become a pervasive and prominent strategic response to global economic dynamics for a large array of companies. The need to simultaneously balance the dynamic tension between multiple forces (geographic, product, market, technological) has resulted in firms extending their presence all over the globe for a multitude of purposes and through a multitude of forms. Correspondingly, international expansion decisions and strategies have acquired increasing strategic significance. International expansion is the process by which a multinational enterprise (MNE) enters and invests in a target foreign country in the pursuit of strategic objectives. Firms often expand internationally because of both ‘pull’ and ‘push’ factors. Firms are ‘pulled’ or attracted by the cost-side and/or revenueside benefits derived from host country dynamics. Cost-side benefits are generated from low-cost production factors and operational expenses. Revenue-side benefits result from market demand growth in a foreign country. Although facing liabilities of foreignness, an MNE’s competitive advantages, manifested in strong technological and organizational skills, may enable the firm to pre-empt emerging investment opportunities and explore market potential. Other revenue-related benefits include accessibility to scarce resources, preferential treatment for foreign direct investment (FDI), and learning or experience accumulation. Unlike ‘pull’ factors, which are related to the host country, ‘push’ factors are associated with the home, or source country, environment....

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