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The Development of International Business

A Narrative of Theory and Practice

Robert Pearce

In this wide-ranging and groundbreaking new book, Robert Pearce provides an analytically-informed basis for understanding the modern multinational enterprise. It does this by tracing the development over the past half-century of two parallel strands of analysis in International Business; designated as the ‘theoretical’ and the ‘practical’. The book shows how the practical restructuring of the MNE as an organisational form has responded to changes in the wider global economy and how this evolution has interfaced with the enriching of the relevant theorising. By tracing the persisting dynamics of the MNEs’ structure and strategic positioning it demonstrates how what it is now can be used as a template for understanding and organising its further evolution as additional changes condition its environment.
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Chapter 3: From innovation to internationalisation: the product cycle model

A Narrative of Theory and Practice

Robert Pearce

Extract

Presents Vernon’s product cycle model as a ‘stand-alone’ contribution, offered before systematic analysis of IB had really commenced, which in retrospect anticipates key concepts that were later formalised. These include the origins of OAs (the innovation stage); initial internationalisation in an essentially Market Seeking (MS) mode, reflecting a particular (‘negative’) type of location advantage (LA); the move to Efficiency Seeking (ES) production in intra-group supply networks (‘positive’ LAs of host countries – that is, cost-competitive inputs). Also suggests that Vernon’s work exemplifies a key theme of the book. It starts from a theoretical issue in international economics (the relationship between trade and FDI) but approaches it through a practical concept from marketing (the life-cycle of a product).

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