Is Competitive Advantage a Necessary Condition for the Emergence of the Multinational Enterprise?

Global Strategy Journal, Forthcoming

33 Pages Posted: 24 Aug 2013

See all articles by Niron Hashai

Niron Hashai

Reichman University - Interdisciplinary Center (IDC) Herzliyah; Hebrew University of Jerusalem - Jerusalem School of Business Administration

Peter J. Buckley

University of Leeds - Faculty of Business; University of Leeds - Division of International Business

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

Suggested Citation

Hashai, Niron and Buckley, Peter Jennings, Is Competitive Advantage a Necessary Condition for the Emergence of the Multinational Enterprise? (August 22, 2013). Global Strategy Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2314699

Niron Hashai (Contact Author)

Reichman University - Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 4610101
Israel

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel

Peter Jennings Buckley

University of Leeds - Faculty of Business ( email )

Leeds LS2 9JT
United Kingdom

University of Leeds - Division of International Business ( email )

Leeds LS2 9JT
United Kingdom

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