Theories of Firm Internationalization

1. COURSE JUSTIFICATION
Though its antecedents go back several centuries, the modern multinational or
transnational company (MNC or TNC) has developed and evolved in the decades
following World War II. In order for the student of International Business to fully
understand, appreciate, and critique the existence of, competition between, and
impacts on society of these firms, a strong theoretical background is required. The
student will argue whether theory of internationalization has steadily evolved
through the incremental addition of a series of complementary theoretical additions
or whether the field is marked with many distinct theories and perspectives on the
subject. The critical and comparative analysis of existing theory will prompt further
state of affairs of internationalized companies, whether they are from developed or
emerging markets.
2. GENERAL OBJECTIVES OF THE COURSE
• To familiarize oneself with the most important theoretical perspectives on
firm internationalization.
• To compare and contrast the gross and subtle implications of their
differences in firms and society.
3. ANALYTICAL DESCRIPTION OF CONTENTS
1. Presentation of the class.
2. Evolution and concepts of firm internationalization.
Objective: to differentiate the basic terms and the antecedent approaches to firm
internationalization.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• letto-Gillies (2012), Ch. 1, 2, and 3 . Pp. 7-48.
3. The Market power of the multinational firm.
Objective: to analyze the theories that broke-through the predominance of
macro-level explanations for internationalization. Focus on the firm and its
international operations, rather than on capital movements across borders.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Forsgren (2013), Ch. 1 and 2.
• Dunning, John & Lundan, Sarianna M. (2008) Pp. 63-78.
4. Internationalization of national firms (Stephen Hymer’s contribution
to modern IB field).
Objective: to understand the contribution of Stephen Hymer to the international
business field.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Dunning, John & Pitelis, C.N. (2008). Stephen Hymer’s
contribution to international business scholarship: and
assessment and extension. Journal of International Business
Studies, 39 (1), 167-176.
• Ietto-Guilles (2012), Ch. 4.
5. Product life cycle and international production.
Objective: to explain how firms internationalize in order to protect their existing
markets of mature products.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Vernon, Raymond (1966) International investment and
international trade in the product cycle. Quarterly Journal of
Economics, 80: 190-207
• Letto-Guilles (2012), Ch. 5.
6. Oligopolistic reactions and the geographical pattern of FDI.
Objective: to explain why firms reduce risk by imitating competing firms’
entrance into foreign operations.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Ietto-Guilles (2012), Ch. 6
7. Exchange rate theories.
Objective: to understand the modalities in currency areas play a crucial role for
internationalization.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Ietto-Guilles (2012), Ch. 7.
• Blonigen, Bruce A. (1997) Firm-Specific Assets and the Link
between Exchange Rates and Foreign Direct Investment. The
American Economic Review , 87 (3) 447-465
8. Internalization Theory and the transnational corporation.
Objective: to explain why international transactions of intermediate products are
organized by hierarchies other than determined by market forces.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Coase, Ronald (1937) The nature of the firm. Economica, 4 (16),
386-405.
9. Eclectic theory (OLI paradigm) of international production.
Objective: to integrate internationalization theory with location-specific elements of
international economies, such as labor costs, barriers to trade, and transport costs.
Learning strategy: Student’s pr
• Johanson, Jan & Wiedersheim-Paul, Finn (1975) The
internationalization of the firm: four Swedish cases. Journal of
Management Studies, October, 305-22.
• Johanson, Jan & Vahlne, Jan-Erik (2009) The Uppsala
internationalization process model revisited: from liability of
foreignness to liability of outsidership, Journal of International
Business Studies, 40(9): 1411-31.
11.Linkage, Leverage and Learning (LLL): Multinationals from
developing countries.
Objective: to explain how trade and specialization are driven by static and
exogenous elements due to factor endowment and by dynamic and endogenous
elements linked to increasing returns.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Matthews, John A. (2006) Dragon multinationals: New players in
the 21st century. Asia Pacific Journal of Management, 23: 5-27
12.New trade theories and MNC activity.
Objective: to explain how new trade theories can relate to the needs of
internationalization of the companies in the new times
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Ietto-Guilles (2012), Chapter12.
13.Developing Countries Multinational Corporations (DCMC), and
Multilatinas.
Objective: To illustrate the internationalization process of companies from
developing countries, emerging markets and other cases such as Multilatina
companies.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Khana, Tarun "Emerging Giants-Building world class companies
in developing countries" Harvard Business Review 2006.
Cuervo-Cazurra, Alvaro., and Stal, E. (2011). The investment
development path and FDI from developing countries: The role of
pro-market reforms and institutional voids. Latin American
Business Review, 12 (3): 209-231.
• Cuervo-Cazurra, A. and Genc, M. E. (2011), Obligating,
Pressuring, and Supporting Dimensions of the Environment and
the Non-Market Advantages of Developing-Country Multinational
Companies. Journal of Management Studies, 48: 441–455.
• Cuervo-Cazurra, Alvaro 6 Lieberman, L. (2010). International
Business and Latin America. Globalization, Competitiveness and
Governability, 4 (3): 16-23.
14.Transnational capitalism.
Objective: to use strategic choice theory to explain how firms facing strategic
complexities respond opportunistically to changing market opportunities through
careful risk evaluation, planning, and coordination.
Learning strategy: Student’s presentation, discussion.
Bibliography:
• Ietto-Guilles (2012), Ch. 13.
15.Deadline for final paper. No class
colchón week
4. ASSESSMENT
ü Cases (2): 20%
ü Quiz (1): 10%
ü Midterm: 25%
ü Paper proposal: 15%
ü Final paper: 30%