Dynamic Capabilities, the Multinational Corporation, and (Capturing Co-Created Value from) Innovation
Forthcoming in Clarke, T., O'Brien, J. and O'Kelley, C. (eds.), Oxford Handbook of the Corporation, Oxford University Press
44 Pages Posted: 22 Dec 2015
Date Written: December 21, 2015
We build on international business (IB) developments over the past 55 years or so, to inform our understanding of the nature, objectives and essence of the MNE. We suggest that in contrast to the conventional economics-based approaches that have been dominant in the field of IB for many decades, the aforementioned can fruitfully be seen as interrelated, co-determined and co-evolving. Moreover, MNEs exist because of entrepreneurial management's actions to create and capture value through the establishment and design of organizations that help develop cross-border markets, shape business ecosystems, and leverage capabilities. We submit that the concepts of co-specialization, market and business ecosystem creation and co-creation, and dynamic capabilities (DCs) are essential to explicating the nature and essence of the MNE. We develop an entrepreneurial, DCs-based theory of the MNE. In our integrated framework, DCs coupled with good strategy are seen as necessary to sustain superior enterprise performance, especially in fast-moving global environments characterized by deep uncertainty. Entrepreneurial management and transformational leadership are incorporated into a capabilities theory of the MNE. The framework is then used to explain how strategy and DCs together determine firm-level sustained competitive advantage (SCA) in global environments. We argue, further, that MNE entrepreneurs, motivated by appropriability, act in path dependent ways to shape demand and supply-side conditions, markets, and supporting business ecosystems that foster the co-creation of appropriable value. Embracing critical developments in organization, international strategic management and entrepreneurship scholarship can help the theory of the MNE move toward a multidisciplinary perspective that is both richer in descriptive content and stronger in predictive power.
Keywords: Dynamic Capabilities, Cross-border Market and Ecosystem Co-creation, Innovation, Theory of MNE and FDI
JEL Classification: F21, F23
Suggested Citation: Suggested Citation