The Case of the United States

Benjamin Gomes-Casseres and Tomás Kohn

Chapter 10 in International Technology Transfer by Small and Medium-Sized Enterprises, 1997, pp 280-296 from Palgrave Macmillan

Abstract: Abstract ‘To compete globally you have to be big’, concluded the Harvard Business Review comment on Alfred Chandler’s study on the dynmics of industrial capitalism (1990a and 1990b). Even before that study, the traditional view among researchers had been that small firms were disadvantaged in international competition, because of the fixed costs of learning about foreign environments, communicating at long distances, and negotiating with national governments. These costs ‘constitute an important reason for expecting that foreign investment will be mainly an activity of large firms’, argued Caves (1982) in his comprehensive review of the literature on the multinational enterprise. A number of empirical studies seemed to back up this conclusion. Horts (1972) found that after controlling for industry effects, the only factor significantly affecting the propensity of firms to invent abroad was their size. Vernon (1970a) found that technological advantages were important in firms’ propensity to invest abroad, but that these advantages were often correlated with scale.

Keywords: Foreign Direct Investment; Small Firm; Large Firm; Multinational Firm; Parent Firm (search for similar items in EconPapers)
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-25686-0_10

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DOI: 10.1007/978-1-349-25686-0_10

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