Managing the Internalisation Process - A Theoretical Perspective

37 Pages Posted: 27 Feb 2008

See all articles by Björn Preuss

Björn Preuss

Copenhagen Business School

Lawrence S. Welch

University of Melbourne - Melbourne Business School

Gabriel R.G. Benito

BI Norwegian Business School

Date Written: February 27, 2008

Abstract

Internalisation theory informs us about why and when multinational enterprises (MNEs) internalise foreign operations, but has less to say about how the internalisation should be prepared and exercised when foreign market operations initially are carried out by local, outside agents. Drawing on insights from managerially-oriented literature, this paper explores the role of management in situations where the market transaction costs of using outside agents are negligible at market entry, but grow over time. A key question pertaining to this situation is: what management instruments may ensure persistent concurrence between changing pressure for internalisation in a foreign market and the effectuated internalisation of an MNE in that market? Management instruments and strategies that potentially support 'staged internalisation' include appropriation of the local outside agent's financial assets (including equity) as well as non-financial assets in relation to user rights, customer relations, and value added activities.

Keywords: Internalization, multinational enterprises, management.

JEL Classification: F23, L22, M21

Suggested Citation

Preuss, Björn and Welch, Lawrence S. and Garcia Benito, Gabriel Robertstad, Managing the Internalisation Process - A Theoretical Perspective (February 27, 2008). Available at SSRN: https://ssrn.com/abstract=1098884 or http://dx.doi.org/10.2139/ssrn.1098884

SMG CBS (Contact Author)

Copenhagen Business School - Department of Strategic Management and Globalization ( email )

Kilevej 14
Frederiksberg, 2000
Denmark
+45 3815 3030 (Phone)

Björn Preuss

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Lawrence S. Welch

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia
+ 61 3 9349 8289 (Phone)
+ 61 3 9349 8144 (Fax)

Gabriel Robertstad Garcia Benito

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

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