Towards a New Agenda for the Study of Business Internationalization: Integrating Markets, Institutions and Politics

Abstract

Business is becoming increasingly international. At the same time, governments are intervening more in the conduct of business. A further development is the growing significance of emerging economies, many of which have a tradition of active government involvement with business. Taken together, these trends make it imperative to understand the relationships between firms and their institutional contexts. Conventional theories adopt an over-rationalized view of these relationships international business. Their apolitical perspective misses the fact that in order to build and maintain international operations, firms need to develop political relations with governments and institutions in home countries and abroad.The aim of this lecture is to develop an alternative perspective with particular reference to the internationalization of firms, large and small. This considers how multinationals gain international positions through bargaining power with foreign governments. By contrast, SMEs face liabilities in dealing with foreign governments and instead often have to achieve internationalization through networking with other SMEs, with domestic communities and support agencies via various forms of social innovation. The lecture concludes that political and social innovation perspectives open new research avenues in the field of international business.

Keywords: politics, multinationals, co-evolution, internationalization, environment, bargaining power, evolution, influence, institutions, markets, small and medium enterprises, social innovation

JEL Classification: D21, M, K2, N2, L20, G18, M16