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Coase and international business: the origin and development of internalisation theory

Casson, M. (2014) Coase and international business: the origin and development of internalisation theory. Managerial and Decision Economics, 36 (1). pp. 55-66. ISSN 1099-1468

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To link to this item DOI: 10.1002/mde.2706

Abstract/Summary

The internalisation theory of the multinational enterprise is a significant intellectual legacy of Ronald Coase. US direct investment in Europe became highly political in the 1960s, and neoclassical trade theory had no explanation. A theory of the multi-plant enterprise was required, and internalisation theory filled this gap. Using Coasian economics to explain the ownership of production plants, and the geography of trade to explain their location, internalisation theory offered a comprehensive account of MNEs and their role in the international economy. This paper outlines the development of the theory, explains the Coasian contribution, and examines in detail the early work of Hymer, McManus and Buckley and Casson. It then reviews the current state of internalisation theory and suggests some future developments.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:38244
Additional Information:Special Issue: Coase and the Theory of the Firm
Publisher:Wiley

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