The Future of the Multinational Enterprise

The Future of the Multinational Enterprise

The Future of the Multinational Enterprise

The Future of the Multinational Enterprise

Excerpt

A recent writer on business economics (Frederick Scherer) addresses his book to 'bright, well-motivated laymen … most of the time I have in mind Supreme Court clerks as the reader'. It is our hope that the Supreme Court clerks will enjoy reading the present work as well. Because this book has a simple but important point to make with respect to the origins and future growth of multinational enterprises, the main onus on the reader is to follow through the logic of the argument without necessarily mastering the technical detail. We have produced ample supporting evidence of a statistical nature, which we believe will interest managers, civil servants, politicians and academics; however, the evidence has been documented in such a way that it does not detract from the gist of the argument as perceived by the non-technical reader.

Chapter 1 presents the background to the study, summarising and interpreting the most recent evidence on the participation of multinational enterprises in the world economy. The discussion highlights several key characteristics of multinational enterprises which require explanation.

Chapter 2 shows how these characteristics can be explained by the concept of internalisation. This concept was introduced forty years ago by Ronald Coase, but it is only recently that its full importance has been recognised; the concept provides a link between the economic theory of markets and managerial theories of organisation and control. It is argued that the growth of the multinational enterprise is governed basically by the costs and benefits of internalising markets. We suggest that in the first phase of the growth of the multinational enterprise (up to the end of the Second World War) the dominant pressure for internalisation was the need of large firms and advanced . . .

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