The Multinational Enterprise

In 1976 it was possible to claim that ‘It is little exaggeration to say that at present there is no established theory of the multinational enterprise’ (Buckley and Casson, 1976, p. 32). The enormous output of theoretical work on the multinational enterprise (MNE) since that date now makes this statement outdated (cf. recent summaries by Buckley, 1981; Calvet, 1981). However, grave doubts must remain concerning the ability of the emergent synthesis to explain and predict the behaviour of MNEs.

This chapter is an attempt to give a theoretical background to research on foreign direct investment by small- and medium-sized enterprises (SMEs), Section 2 examines alternatives theoretical approaches to SMEs investing abroad. Section 3 outlines the special issues which arise from SME foreign ventures and ends with an attempted synthesis of the theoretical approaches. In Section 4, a brief discussion of the nature of foreign direct investment by SMEs takes place. The chapter ends with a short conclusion.

To what extent are cooperative ventures really cooperative? What exactly is meant by cooperation in this context? In international business, the term cooperative venture is often used merely to signify some alternative to 100 per cent equity ownership of a foreign affiliate: it may indicate a joint venture, an industrial collaboration agreement, licensing, franchising, subcontracting, or even a management contract or countertrade agreement. It is quite possible, of course, to regard such arrangements as cooperative by definition, but this fudges the substantive issue of just how cooperative these arrangements really are.

This chapter is an exploration of the difficulties of testing the internalisation approach in the modern theory of the multinational enterprise (MNE). It examines the structure of the theory and attempts to cover those factors that would refute the theory. Previous attempts to test the theory are examined in the third section and the chapter concludes with the view that there is a need to sharpen up the theory to allow crucial experiments and to discriminate between alternative approaches. The paper attempts to steer a course between complacency on the one hand and nihilism on the other and between excessive generality and over concentration on detail

This chapter is an investigation of the relationship between the extent of a firm’s foreign production and its home country exporting performance. The methodology is based on cross-sectional analysis at the firm level. It enables us to establish a number of statistical relationships but does not allow us to establish conclusively the effects of foreign production on parent firm export performance. To assess the effects fully we would need to know the level of export performance at some other level of foreign production. Received hypotheses on these issues suggest that foreign production might substitute for exports of final products from the parent, but be complementary with increased exports of intermediate goods (parts and components) from the parent. In addition, the foreign production subsidiary may act as a sales subsidiary for goods produced by the parent.^{3, 15} In fact, a study of US firms in 1965 showed that 49 per cent of total intra-firm exports were ‘goods for resale without further manufacture’, another 7 per cent were ‘exports sold for parents’ account on a commission basis’, making the total share of finished goods for resale 56 per cent. Goods ‘for further processing and assembly’ represented another 36 per cent, capital equipment 5 per cent, with 3 per cent unallocated.^{2, 11}

It fiddles its accounts. It avoids or evades it taxes. It rigs intra-company transfer prices. It is run by foreigners from decision centres thousands of miles away. It imports foreign labour practices. It doesn’t import foreign labour practices. It overpays. It underpays. It competes unfairly with local firms. It is in cahoots with local firms. It exports jobs from rich countries. It is an instrument of rich countries’ imperialism. The technologies it brings to the third world are old-fashioned. No, they are too modern. It meddles. It bribes. Nobody can control it. It wrecks balances of payments. It overturns economic policies. It plays off governments against each other to get the biggest investment incentives. Won’t it please come and invest. Let it bloody well go home.¹

‘It’, of course, is the multinational enterprise. This chapter seeks to evaluate in the light of the theory of the multinational enterprise the proposal that such firms need to be brought under the control of national governments and/or international (supranational) bodies.

This contribution addresses itself to some of the major policy issues of direct investment in the EC with particular reference to the employment impact of British, French and German multinationals in the new Member States, namely Greece, Portugal and Spain.

This article suggests that the complex set of markets and the composite products which make up tourism can be best analysed by adopting an approach based on the analysis of transactions. The transaction is the fundamental unit of economic analysis. Tracing the transactions chain and the packaging of transactions makes the analysis of tourism more straightforward and gives a unit to its conceptualisation.

Manpower management in the construction industry is heavily influenced by the particular characteristics of the industry. The most significant include the labour intensive nature of much construction, employment instability, an unstable industrial structure which has been referred to as the ‘construction jungle’ (Stallworthy and Kharbanda, 1985), fragmented bargaining structures and the interdependence of trades as well as pervasive regulation. Analysis is also complicated by the diversity of labour management practices. Significant differences exist between public and private sector contractors. Within the private sector, unionised trades and firms coexist with a significant non-union sector and a large casualised subcontracting industry. The emphasis in this paper is on private sector construction and particular attention is paid to the growth of ‘labour only’ subcontracting.

Japanese foreign direct investment is felt by some analysts to require a special approach because it exhibits several characteristics which differ from US outward investment. These may be characterised as follows (Ozawa, 1979b).

As Japan’s economic success has continued, albeit somewhat bated, interest in the ‘secrets’ of Japanese-style management has grown considerably. Many people have expressed the need to transfer Japanese practices to Western firms, and various modes of transfer have been mentioned. First, the transfer could occur through the direct adoption of Japanese management practices by Western firms. Second, as Japanese firms invest increasingly in Western countries we can expect spillover effects resulting from interaction between the local population (workers, local managers, clients, suppliers, competitors) and Japanese management. Finally, many subsidiaries of Western firms in Japan (especially joint ventures) have had to adopt to Japanese conditions. It can be suggested that any benefits so gained (including better management practices) may be transferred back to the parent company, especially through the flow of personnel.

The last decade has seen a proliferation of research on ‘Third World Multinationals’, ‘Multinationals of the South’, ‘Foreign Direct Investment from Developing Countries’. However, although some valiant attempts at synthesis have been made, this research remains fragmented and lacks a common focus.¹ In some respects such a situation is desirable. Increasingly suitable theoretical vehicles and common objectives will emerge as the research field (and the phenomena) mature(s). But it is desirable to hasten this process wherever possible — and this is one of the aims of this article.