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Über dieses Buch

This book presents more than four decades of research in international business at the Department of Business Studies, Uppsala University. Gradually, this research has been recognized as 'The Uppsala School'. The work in Uppsala over the years reflects a broad palette of issues and approaches.





1. Knowledge, Networks and Power — The Uppsala School of International Business

In the early 1960s, Sune Carlson, who came to the new Department of Business Studies after staying 10 years in the UN, started a research program on international business. The initiation of this program was considered against the background of the accelerating European economic integration that was expected to have important consequences for different segments of Swedish industry. Another important factor was that after World War II, many US companies entered European markets, thereby changing the international markets where Swedish firms operated. A number of young doctoral students were engaged in international business research projects. Some of these concerned the international operations of various Swedish industries, such as the special steel industry and the pulp and paper industry. Other projects concerned specific kinds of international business decisions, such as foreign direct investment by Swedish firms, foreign firms’ investments in Sweden or Swedish firms’ establishment of sales subsidiaries abroad. A common characteristic of the studies was a strong empirical orientation. Important research questions were “How do the firms compete in foreign markets?” “How are they organized?” “What are the important problems they face when going abroad?” “How do they adapt to changing competition in their markets?” etc. Evidently, these questions were relevant for the firms.

Mats Forsgren, Ulf Holm, Jan Johanson

The Internationalization Process of the Firm


2. Experiential Knowledge and Cost in the Internationalization Process

In furthering our understanding of the dynamics of the internationalization of firms, process models have played a significant role [Bilkey and Tesar 1977; Cavusgil 1980, 1984; Czinkota 1982; Johanson and Vahlne 1977, 1990; Luostarinen 1980; Reid 1983]. In these models, market-specific experiential knowledge is central in explaining the firm’s internationalization process. A vast amount of research, using the concept of experiential knowledge, on the internationalization process and the choice of mode for entering foreign markets has been accumulated [Barkema, Bell and Pennings 1996; Beamish 1990; Calof and Beamish 1995; Erramilli 1990, 1991; Erramilli and Rao 1990, 1993; Hirsch 1993; Kogut and Singh 1988; O’Grady and Lane 1996; Reid 1984; Root 1987; Sharma and Johanson 1987; Wiedersheim-Paul, Olson and Welch 1978]. Surprisingly, none of the above-mentioned work has explicitly dealt with the cost of the internationalization process. This is surprising since the management of internationalization unavoidably gives rise to the question of cost [Carlson 1974]. An internationalization process entails risk and the investment of resources. Here the issue of the effects of the critical experiential knowledge on the cost of the internationalization process becomes important. Cost aspects have a bearing on the profit generated by firms [Bilkey 1982], on a firm’s inclination to enter foreign markets [Dichtl, Koeglmayr and Mueller 1990], and on the selection or changing of foreign market entry mode [Calof and Beamish 1995].

Kent Eriksson, Jan Johanson, Anders Majkgård, D. Deo Sharma

3. A Note on the Criticisms Against the Internationalization Process Model

The internationalization process model (Johanson/Vahlne 1977) has been reviewed and tested in a considerable number of studies. The underlying assumption when testing the model is that there is a connection between the progressive stages of the internationalization, stage model (S-model) and the variables of commitment and knowledge in the internationalization process model (IP-model). The S-model is merged with the IP-model and is treated as one, since the concepts are seen as being interchangeable. The unification led some researchers to completely reject the IP-model, since their observations did not correspond with the progressive stages in internationalization modes (Engwall/Wallenstal 1988). Other researchers had more modest objections and remarked on some inconsistencies in the appearance of the stages (Hedlund/Kverneland 1985, Forsgren 1989, Calof/Beamish 1995).

Amjad Hadjikhani

4. The Concept of Learning in the Uppsala Internationalization Process Model: A Critical Review

One of the pioneers within the research area of firm internationalization, Sune Carlson, started from the simple fact that firms which intend to go abroad suffer from lack of knowledge about how to conduct a business in a foreign market (Carlson, 1966). His research question was directed to the issue of how firms can handle uncertainty due to this lack of knowledge by shaping their investment behavior in a specific way.

Mats Forsgren

5. Internationalisation in Industrial Systems — A Network Approach

The theme of the book suggests that international interdependence between firms and within industries is of great and increasing importance. Analyses of international trade, international investments, industrial organisation and international business behaviour attempt to describe, explain and give advice about these interdependencies. The theoretical bases and the level of aggregation of such analyses are naturally quite varied.

Jan Johanson, Lars-Gunnar Mattsson

6. Business Networks and Cooperation in International Business Relationships

The growing academic interest in cooperative strategies in international business has, during the last decades, focused mainly on formal cooperation as reflected in studies on international joint ventures, licensing, management contracts and strategic alliances [Contractor and Lorange 1988]. Parallel to this development, however, there has been a surge of interest in cooperative business relationships between supplier firms and customer firms in business markets. This interest has been manifested in studies in marketing [Anderson and Narus 1990; Dwyer, Schurr and Oh 1987], organization [Larson 1992; Powell 1990], accounting [Johnson 1992], and economics [Carlton 1986]. In all of these fields, the cooperative business relationships between suppliers and customers have been considered very important. It is surprising that, to our knowledge, no research on international business relationships has yet been presented in international business literature. This is even more surprising, when we consider that Toyne [1989] proposes international exchange as the foundation for theory building in international business. The relational exchange in business relationships is a very basic form of international exchange. Without questioning the relevance of received research on cooperative strategies in international business, we believe there is a need for studies on cooperation in relational exchange. This paper presents an empirical study of cooperation in international business relationships.

Desirée Blankenburg Holm, Kent Eriksson, Jan Johanson

7. The Uppsala Internationalization Process Model Revisited: From Liability of Foreignness to Liability of Outsidership

Much has changed since our model of the internationalization process of the firm was published in the Journal of International Business Studies (JIBS) (Johanson & Vahlne, 1977). In fact, the economic and regulatory environments have changed dramatically. Company behavior is also different in some respects. The research frontier has moved too. There are some concepts and insights that did not exist when our model was published.

Jan Johanson, Jan-Erik Vahlne

8. Network Knowledge and Business-Relationship Value in the Foreign Market

In several studies it has been observed that single business relationships can play a critical role in the early international expansion of SME firms (Chetty and Blankenburg Holm, 2000; Child et al., 2002; Ellis, 2000; Hilmersson and Jansson, 2011; Johanson and Vahlne, 2003; Sharma and Blomstermo, 2003). It has also been shown that network constructs can be used fruitfully for understanding and explaining SME internationalisation (Coviello and Munro, 1995; Hadley and Wilson, 2003; Oviatt and McDougall, 2005). Against this background, a purpose of this paper is to study how networks influence business relationships in foreign markets.

Jukka Hohenthal, Jan Johanson, Martin Johanson

9. Division Headquarters Go Abroad — A Step in the Internationalization of the Multinational Corporation

In 1986, SKF, the Swedish ball-bearing company was reorganized into a multi-divisional structure (M-form) and a speciality bearing division was formed. At the same time the US ball-bearing company MRC with a strong position in some speciality bearing lines was acquired. The headquarters (HQ) of the speciality bearing division were placed in the USA with the executive manager of the former North American regional HQ as division executive. Also in 1986, Alfa Laval, the old Swedish multinational corporation (MNC) with roots in separator technology, was divided into 12 divisions. The German subsidiary Bran+Luebbe GmbH became a division of its own headed by the former subsidiary executive with HQ in Germany. Further, in the 1980s the packaging division of SCA, one of the leading Swedish pulp and paper corporations, expanded rapidly in the European market through a number of foreign acquisitions. In 1989, division HQ were moved from Sundsvall in Sweden, where corporate HQ were situated, to Brussels in the new centre of their European market. The top management was unsatisfied with earlier attempts of managing at a distance. Thus, when foreign operations increased and became a larger part of the division’s total operations it was decided to move division HQ abroad.

Mats Forsgren, Ulf Holm, Jan Johanson

The Multinational Corporation


10. Headquarters’ Knowledge of Subsidiary Network Contexts in the Multinational Corporation

Competence development in the multinational corporation (MNC) is driven by competition in local industrial clusters, and the operating units engaged in those clusters are critical in the development of the MNC, as Porter, Sölvell, and Zander (1990) posit. They assume that the operations of the single, unique subsidiary in relation to its unique industrial setting are critical in the development of the MNC. In this view, competence development is not created by organizational arrangements; rather, it is the outcome of a struggle in the market. But it does not take place in response to general market forces; it is driven by interaction with customers, suppliers, and competitors in the industrial cluster.

Ulf Holm, Jan Johanson, Peter Thilenius

11. Rationality vs Ignorance: The Role of MNE Headquarters in Subsidiaries’ Innovation Processes

It has been recognized that innovation processes in multinational enterprises (MNEs) are largely context-specific, local activities carried out at the subsidiary level (e.g., Andersson, Forsgren, & Holm, 2007; Asakawa, 2001; Birkinshaw & Hood, 1998; Doz & Prahalad, 1981; Ghoshal & Bartlett, 1988; Hedlund, 1986; Rugman & Verbeke, 2001). As a consequence, the ability of corporate headquarters (HQ) to influence these widely dispersed processes has become a major issue in contemporary research on MNEs. What is the role of HQ in these processes? To what extent can it participate in and play an active role in specific innovation processes? What are the performance implications when it gets involved? These questions, which have not yet established answers, warrant further research. In addition, studies aimed at finding the answers have not yet debated the validity of alternative perspectives related to the knowledge asymmetry between the potential participants in innovation processes.

Francesco Ciabuschi, Mats Forsgren, Oscar Martín Martín

12. Internal Embeddedness, Headquarters Involvement, and Innovation Importance in Multinational Enterprises

For organizations upgrading their competitive base, innovation is crucial for survival and prosperity (Baumol, 2002). In the field of international business and management, innovation is considered strategically important for the ability of multinational enterprises (MNEs) to build and sustain competitive advantage, thus creating value (Franko, 1989; Hitt et al., 1996). Given these premises, and in line with recent studies, such as the one made by Garcia-Pont et al. (2009) which suggests that researchers have devoted limited attention to the effects of internal embeddedness on the organizational scope of subsidiary initiatives and competitive advantage, we investigate how subsidiary internal embeddedness, pertinent to innovation-developing activities, affects head-quarters involvement in the development process and how these two factors influence the impact and the importance of the innovation.

Francesco Ciabuschi, Henrik Dellestrand, Oscar Martín Martín

13. The Strategic Impact of External Networks: Subsidiary Performance and Competence Development in the Multinational Corporation

A special feature of multinational firms (MNCs) is the notion that their sub-units (subsidiaries) are embedded in different local networks (Ghoshal and Bartlett, 1990; Ghoshal and Nohria, 1997; Fors-gren, Johanson, and Sharma, 2000). Each subsidiary maintains unique and idiosyncratic patterns of network linkages and consequently is differentially exposed to new knowledge, ideas and opportunities (McEvily and Zaheer, 1999). In fact, this differential exposure has been put forward as one of the basic competitive advantages of the multinational firm, because it increases the breadth and variety of its network resources (Malnight, 1996). It is also in line with recent trends in foreign direct investment theory, in which foreign investments are viewed as series of attempts to selectively tap knowledge linked to specific local business contexts (Cantwell, 1990; Almeida, 1996; Dunning, 1996).

Ulf Andersson, Mats Forsgren, Ulf Holm

14. Competence Development through Business Relationships or Competitive Environment? — Subsidiary Impact on MNC Competitive Advantage

The need for studies of how MNCs make extensive use of the knowledge of subsidiaries is stressed in the literature. The relevance of such studies has its origins in the belief that an MNC is a knowledge-seeking organisation and that knowledge transfer between its separate units leads to competitive advantage (Cantwell 1990, Kogut/Chang 1991, Madhok 1997, Teece/Pisno/Shuen 1997, Frost 2001). An important condition, though, is that subsidiaries actually do develop unique knowledge, a “fact” confirmed in several studies which partly has been explained by the characteristics of subsidiary environments (Bartlett/Ghoshal 1986, Andersson, Forsgren, and Holm 2002, Foss/Pedersen 2002). For instance, besides other explanations, such as the internal co-ordination of resources and the entrepreneurship of individual managers, the environment is assumed to contribute to the development of corporate “strategic leaders” (Bartlett/Ghoshal 1989), “centers of competences” (Sölvell/Zander/Porer 1991), and “centers of excellence” (Forsgren/Johanson/Sharma 2000, Holm/Pedersen 2000) and, thus, competitive advantages for the MNC (Cohen/Levinthal 1990, Dunning 1998, Nobel/Birkinshaw 1998).

Ulf Holm, Christine Holmström, Deo Sharma

15. Cultural Distance or Cultural Positions? Analysing the Effect of Culture on the HQ—Subsidiary Relationship

This paper adopts a relational view of cultural differences: that is, we are interested in how the cultural characteristics of the national environments of two organisational units, and the differences between them, affect the units’ relationship. In the international business literature, the conventional approach to studying cultural differences is to use the concept of cultural distance and its most popular measure, the Kogut and Singh (1988) index. Recently, this concept and its measure have faced serious criticism (Drogendijk & Slangen, 2006; Shenkar, 2001), so we need studies that help develop other, richer conceptualisations and metaphors of cultural differences (Drogendijk & Zander, 2010; Shenkar, Luo, & Yeheskel, 2008) and their role in relationships between organisations. The cultural distance concept has limitations when applied in the investigation of relational situations, because it does no justice to actual cultural characteristics, nor does it account satisfactorily for both sides of the relationship. For example, two pairs of cultures can be at the same cultural distance, yet at completely different ends of one or more cultural dimensions. Cultural distance, in other words, ignores the actual cultural characteristics or positions on cultural dimensions, though these likely affect the behaviour of people from different countries and the relationships between them.

Rian Drogendijk, Ulf Holm

16. Balancing Subsidiary Influence in the Federative MNC: A Business Network View

The contest for intra-organisational power in the multinational corporation (MNC) has gradually become a prominent issue on the research agenda. As long as 25 years ago, Hedlund (1980) investigated the strategic roles of subsidiaries in MNCs, and Doz and Prahalad (1981) raised the issue of how difficult it is for headquarters to remain in control of its subsidiaries and to influence their strategies over time. Since then, several researchers have suggested that MNCs can be considered to be dispersed structures of power in which the top management’s authority does not necessarily result in hierarchical power being the ultimate control mechanism (Hedlund, 1986; Forsgren, 1989; Ghoshal and Bartlett, 1990; Doz and Prahalad, 1993; Ferner and Edwards, 1995; Kristensen and Zeitlin, 2001; Morgan and Whitley, 2003). Birkinshaw and Hood (1998) examined the evolution of capabilities at the subsidiary level and recognised that, in most corporations, there is an ‘internal competition for charter’ that implies a process of change in subsidiary roles (Birkinshaw and Hood, 1998: 782). Case research has also indicated that changes in the charters of divisions or subsidiaries in MNCs constitute a strong feature of horizontal or vertical competition in the corporate ‘marketplace’ (Galunic and Eisenhardt, 1996; Birkinshaw and Fry, 1998). The tension between the headquarters and overseas laboratories caused by the laboratories’ desire for autonomy and influence is an example of such a competition (Asaka wa, 2001).

Ulf Andersson, Mats Forsgren, Ulf Holm

17. Quo Vadis? The Entry into New Technologies in Advanced Foreign Subsidiaries of the Multinational Enterprise

In an article that marked the beginning of extensive research on foreign technological activity in the multinational enterprise (MNE), Robert Ronstadt (1978) suggested an evolutionary pattern by which initial R&D investments in foreign subsidiaries expand into significant capabilities in developing new and improved products for foreign or even global markets. The prediction was the emergence of an increasing number of advanced foreign research and development subsidiaries in the MNE, capable of making substantial contributions to the technological and strategic renewal of the entire corporation. Now, some three decades later, it appears that Ronstadt’s overall prediction was essentially correct. Research has confirmed an increase in the foreign part of technological capabilities in many MNEs, and accomplished subsidiaries with advanced technological capabilities have become common in the large and well-established MNE (Cantwell, 1989; Cantwell & Mudambi, 2005; Dunning, 1994; Reger, 2002).

Katarina Blomkvist, Philip Kappen, Ivo Zander

18. Hymer’s Analysis of the Multinational Organization: Power Retention and the Demise of the Federative MNE

Although Hymer is acknowledged as the pioneer of modern analysis of the multinational enterprise (MNE) (Dunning, 1996; Pitelis, 2002), his analysis of the nature of the multinational as an emerging organizational form has not received the attention it merits. His insights on this issue are contained in writings which have attracted attention primarily for Hymer’s analysis of the impact of MNEs on the global division of labour and the generation of uneven development. His specifically organizational insights have not been salient in the discussion of his work.

Mohammad Yamin, Mats Forsgren


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