Global Resource Flows and MNE Network Integration

In 1995 the total sales of foreign-controlled affiliates of multinational enterprises (MNEs) exceeded the total world trade in goods and services of $6.1 trillion (WTO, 1996). Dunning (1993a) estimated that among major economies, such as Germany, the USA and the UK, MNEs account for approximately 80 per cent of trade in technology and managerial skills. In this chapter an attempt is made to identify and explain crossborder integration within established MNEs. Consideration is given specifically to the direction and the intensity of resource flows in goods and services, knowledge and capital that take place within the subsidiary network of an MNE. By examining the direction and magnitude of these resource flows, it is suggested, subsidiary strategy can be analysed along three major dimensions. This framework provides managers with greater understanding of global integration across subsidiaries.