Handbook on Small Nations in the Global Economy

Handbook on Small Nations in the Global Economy

The Contribution of Multinational Enterprises to National Economic Success

Elgar original reference

Edited by Daniel Van Den Bulcke, Alain Verbeke and Wenlong Yuan

This unique, extensive Handbook illustrates that multinational enterprises can contribute substantially to the competitive advantage of small countries. It advances the notion that small nations increasingly need to rely on both home-grown and foreign multinational enterprises to achieve domestic economic success in industries characterized by international competition.

Chapter 6: Multinational Enterprises from Small Economies: The Internationalization Patterns of Large Companies from Denmark, Finland and Norway

Gabriel Robertstad G. Benito, Jorma Larimo, Rajneesh Narula and Torben Pedersen

Subjects: business and management, international business


* Gabriel Robertstad G. Benito, Jorma Larimo, Rajneesh Narula and Torben Pedersen It is generally accepted that, ceteris paribus, firms from small open economies (SMOPECs) tend to demonstrate a higher propensity to internationalize their operations than those from larger home economies (Bellak and Cantwell, 1998). The most obvious factor is market size, and the tendency for SMOPEC firms to venture to foreign markets is often explained primarily by this constraint. At the same time, many industries are increasingly becoming global. Factors such as increasingly rapid technological change, convergence of consumers’ tastes and increased worldwide competition have led to a quest for scale, scope and learning economies that, in turn, has motivated the development of increasingly larger corporations through international mergers and acquisitions (Ghoshal, 1987; Yip, 1989; Kozul-Wright and Rowthorn, 1998). These are the factors that act as centrifugal forces in the internationalization process. Indeed, as firms are becoming increasingly global, the question is whether there remains a role to be played by the local environment. In this chapter it is proposed, along with Porter (1990), that centripetal forces are at play as well. Institutions, support infrastructure and related companies exist around, and because of, firms in a given location (Markusen, 1996). The ability of such factors to meet the needs of the multinational enterprise (MNE) play a crucial role in determining the extent of their internationalization (Narula, 2002). For this reason, it has been argued that the home base plays a continued or possibly increasingly important role for the global firm...

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