A Note on the Transnational Solution and the Transaction Cost Theory of Multinational Strategic Management

Alan Rugman and Alain Verbeke
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Alain Verbeke: University of Toronto

Journal of International Business Studies, 1992, vol. 23, issue 4, 771 pages

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.© 1992 JIBS. Journal of International Business Studies (1992) 23, 761–771

Date: 1992
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