A dynamic model of the choice of mode for exploiting complementary capabilities

Tailan Chi and Anju Seth
Additional contact information
Tailan Chi: University of Kansas, School of Business, Lawrence, USA
Anju Seth: Department of Management, Virginia Tech, Blacksburg, USA

Journal of International Business Studies, 2009, vol. 40, issue 3, 365-387

Abstract: This paper examines the choice of mode for a multinational enterprise and a local firm to exploit their complementary capabilities. We develop a combined real options and game-theoretic model of modal choice by incorporating a range of factors drawn from the dynamic capabilities theory and transaction cost or organizational economics. The factors scrutinized in the model include the parties' absorptive capacities, frictions in knowledge and asset markets and associated incentive problems, cost of switching from one mode to another and cost associated with power jockeying. The model uses simulation to examine how these factors interact to influence the choice of mode. The results identify a number of conditions for one factor to dominate another, and help to reconcile different theories that have made contradicting predictions with regard to the effects of such factors as uncertainty and capability divergence on the optimal choice of mode. Journal of International Business Studies (2009) 40, 365–387. doi:10.1057/jibs.2008.65

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v40/n3/pdf/jibs200865a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v40/n3/full/jibs200865a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:40:y:2009:i:3:p:365-387

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().