From the Theory of the Firm to FDI and Internalisation: A Survey

Valeria Gattai

No 2005.51, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper surveys recent contributions on the Internalisation issue, based on different theories of the firm, to show how the make-or-buy decision, at an international level, has been assessed through the opening up of the “black box” - traditionally explored by the theorists of the firm – and the simultaneous endogenization of the market environment – as in the International Economics tradition. In particular, we consider three Archetypes – Grossman-Hart-Moore treatment of hold-up and contractual incompleteness, Holmstrom-Milgrom view of the firm as an incentive system, Aghion-Tirole conceptualisation of formal and real authority in organisations – and show how they have been embedded in industry and general equilibrium models of FDI to explain the boundaries of global firms.

Keywords: FDI; Internalisation; International Economics; Incomplete contracts (search for similar items in EconPapers)
JEL-codes: F1 F2 L1 L2 (search for similar items in EconPapers)
Date: 2005-04
New Economics Papers: this item is included in nep-int
References: View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: From the Theory of the Firm to FDI and Internalisation: A Survey (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2005.51

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