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Chapter 6: Institutions and the OLI Paradigm of the Multinational Enterprise with Sarianna Lundan
6. Institutions and the OLI paradigm of the multinational enterprise With Sarianna Lundan What determines the boundaries or scope of the firm? This question has been fundamental to economics and organisational studies since the seminal paper by Coase (1937). Since then, many attempts have been made to articulate a satisfactory theory of the firm, perhaps the most prominent of which – certainly among management scholars – is the resource-based view inspired by Penrose (1959). Alongside these theories, evolutionary economists, who have placed their main focus on the accumulation of technological assets and knowledge by firms across borders, have contributed to our theoretical understanding of what determines the boundaries of multinational enterprises (MNEs) over time and space. What all of these approaches have in common is that they are ownershipbased theories of the firm, that are increasingly being challenged by new forms of doing business, as, for example, is exemplified by the contemporary network MNE. The network MNE comprises many different types of cross-border organisation, from 19th century trading companies (Jones, 2000) and ‘traditional’ business groups, such as those found in Latin America and Asia (Guillén, 2000b), to new cellular or network-based forms of organisation, many of which have originated in Asia (Mathews, 2006a), and the emergence of the metanational MNE (Doz, Santos, and Williamson, 2001). How far these new forms of organisation present a fundamental challenge to the existing theories of the MNE, and the OLI or eclectic paradigm in particular, has been the subject of recent debate (Collinson and Rugman,...
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