Abstract
This article assesses the extent to which the results of Bartlett and Ghoshal's [1989] work can be incorporated in what has now become one of the core explanations of multinational strategic management, i.e., the transaction cost-based theory of international production. We demonstrate that the transaction cost approach fully incorporates the empirical findings of Bartlett and Ghoshal's work. To do so requires that we make a new distinction between location-bound and non-location-bound firm-specific advantages. In addition, three possible uses of country-specific advantages by multinational enterprises need to be identified. While the transnational solution, as proposed by Bartlett and Ghoshal, is not itself a new theory of multinational strategic management, it is compatible with the transaction cost-based model of multinational strategic management.
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*Alan M. Rugman is Professor of International Business at the University of Toronto, Canada. He was also Research Director of the Ontario Centre for International Business when this article was prepared.
**Alain Verbeke is Professor of International Business and Public Policy at the University of Brussels, Faculty of Economics, Social and Political Sciences—Solvay Business School, Belgium. At the time that this article was written he was Visiting Professor of International Business at the University of Toronto.
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Rugman, A., Verbeke, A. A Note on the Transnational Solution and the Transaction Cost Theory of Multinational Strategic Management. J Int Bus Stud 23, 761–771 (1992). https://doi.org/10.1057/palgrave.jibs.8490287
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DOI: https://doi.org/10.1057/palgrave.jibs.8490287