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Economics of International Business

A New Research Agenda

Mark Casson

Economics of International Business sets out a new agenda for international business research. Mark Casson asserts that it is time to move the subject on from sterile debates about transaction cost economies and resource-based theories of the firm. Instead of focusing on the individual firm, the new agenda focuses on the global systems view of international business. A static view of the firm’s environment is replaced by a dynamic view which highlights the volatility of the international business environment. Coping with volatility requires entrepreneurial skills, flexibility and the need to synthesize information on a global basis. To co-ordinate the global system properly, entrepreneurs must co-operate through social networks of trust, as well as competing. Constructing a network of joint ventures, it is argued, is simply not enough.
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Chapter 1: Models of Multinational Enterprise: A New Research Agenda

Mark Casson


with Peter J. Buckley 1.1 INTRODUCTION International business (IB) is a discipline that has reached maturity. It has a professional body – the Academy of International Business – with over three thousand members. The academy publishes a journal – the Journal of International Business Studies – which is widely cited by other social scientists, and several other reputable journals have been established in the field. A major work of survey and synthesis (Caves, 1996) has gone into a second substantial edition. At the end of the millennium, the scholarly study of IB appears to be in very good shape. Maturity can sometimes indicate stagnation, however. This is certainly true of technological development in some industries. Is it also true of intellectual development in the ‘industry’ of IB research? There is some evidence to support this view. Many of the key concepts in IB date back to the 1960s and 1970s. This was a time when social and political concerns about the spread of multinational enterprises (MNEs) were running high. A large amount of data was collected in order to address issues about national sovereignty, imbalances in international capital flows, foreign dependence on US technology, and so on (see for example United Nations, 1973; United States Tariff Commission, 1973; Vaupel and Curhan, 1974). The need to interpret this data was a considerable stimulus to theoretical research. Internalization theory was applied to the MNE about this time (McManus, 1972; Rugman, 1981; Hennart, 1982). In particular, Buckley and Casson (1976) used internalization theory to explain why foreign...

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