Is Competitive Advantage a Necessary Condition for the Emergence of the Multinational Enterprise?
Global Strategy Journal, Forthcoming
33 Pages Posted: 24 Aug 2013
Date Written: August 22, 2013
Abstract
The paper challenges the view that competitive advantage is a necessary condition for the emergence of the multinational enterprise. It formally derives the conditions under which multinational enterprises may emerge without possessing a competitive advantage vis-a-vis their rivals. This counter-intuitive argument is based on three insights: (1) the ability of a larger number of disadvantaged home-country entrepreneurs to enroll workers in the host country more efficiently than a smaller number of advantaged host country entrepreneurs; (2) asymmetric liability of foreignness for home- and host-country entrepreneurs; and (3) the ability of location and internalization advantages to substitute for ownership advantage.
Keywords: multinational enterprise, competitive advantage, eclectic paradigm, ownership advantage, internationalization
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