Theories of Firm Internationalization

Universidad EAFIT

Course Description

  • Course Name

    Theories of Firm Internationalization

  • Host University

    Universidad EAFIT

  • Location

    Medellín, Colombia

  • Area of Study

    Business Administration, Economics, Peace and Conflict Studies

  • Language Level

    Taught In English

    Hours & Credits

  • Contact Hours

  • Recommended U.S. Semester Credits
  • Recommended U.S. Quarter Units
  • Overview

    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.
    • 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.
    1. Presentation of the class.
    2. Evolution and concepts of firm internationalization.
    Objective: to differentiate the basic terms and the antecedent approaches to firm
    Learning strategy: Student’s presentation, discussion.
    • 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.
    • 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.
    • 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.
    • 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.
    • Ietto-Guilles (2012), Ch. 6
    7. Exchange rate theories.
    Objective: to understand the modalities in currency areas play a crucial role for
    Learning strategy: Student’s presentation, discussion.
    • 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.
    • Coase, Ronald (1937) The nature of the firm. Economica, 4 (16),
    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.
    • 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.
    • Ietto-Guilles (2012), Chapter12.
    13.Developing Countries Multinational Corporations (DCMC), and
    Objective: To illustrate the internationalization process of companies from
    developing countries, emerging markets and other cases such as Multilatina
    Learning strategy: Student’s presentation, discussion.
    • 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.
    • Ietto-Guilles (2012), Ch. 13.
    15.Deadline for final paper. No class
    colchón week
    ü Cases (2): 20%
    ü Quiz (1): 10%
    ü Midterm: 25%
    ü Paper proposal: 15%
    ü Final paper: 30%


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