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Internalization theory: an unfinished agenda

Casson, M., Porter, L. and Wadeson, N. ORCID: (2016) Internalization theory: an unfinished agenda. International Business Review, 25 (6). pp. 1223-1234. ISSN 0969-5931

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To link to this item DOI: 10.1016/j.ibusrev.2016.03.007


Internalization theory is usually applied at the firm level to analyse FDI, licensing and subcontracting, but this paper extends it to the industry level. It synthesises internalisation theory and oligopoly theory. It analyses a global industry where firms innovate competitively, and freely enter and exit the industry. It presents a formal model which highlights the inter-dependencies between rival firms. Each firm responds to its rivals by jointly optimising production and innovation through inter-dependent ownership and location decisions. The competitive outcome determines which firms serve which markets, which firms enter or exit the industry, and the internalisation strategy of each firm.

Item Type:Article
Divisions:Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:61847


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