Global Oligopolistic Competition and Foreign Direct Investment: Revisiting and Extending the Literature

Michael W. Hansen, Anne K. Hoenen

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    Abstract

    Purpose: The purpose of this paper is to re-visit and re-invigorate the oligopolistic industry perspective on multinational corporations (MNC) strategy.
    Design/methodology/approach: Based on insights from the industrial organization tradition and strategic management, the paper brings the original insights of the oligopolistic industry perspective into a modern context by outlining a conceptual framework that may guide future international business (IB) research on MNC strategy in oligopolistic industries.
    Findings: This paper demonstrates how contemporary IB literature pays little attention to a key insight of the early IB literature, namely, that foreign direct investment (FDI) often is driven by strategic interaction among MNCs in oligopolistic industries. Instead, the contemporary IB literature focuses on the FDI as a way to reduce transaction costs and/or as a way to leverage and build capabilities across borders. The paper argues that progressing global concentration in many industries warrants a rediscovery of the oligopolistic perspective on FDI.
    Originality/value: The paper provides a comprehensive and unique literature review of the literature on MNC strategy in oligopolistic industries. Based on this review, the paper develops a novel conceptual framework that may inspire future IB research on MNC strategy in oligopolistic industries.
    Original languageEnglish
    JournalCritical Perspectives on International Business
    Volume12
    Issue number4
    Pages (from-to)369-387
    Number of pages19
    ISSN1742-2043
    DOIs
    Publication statusPublished - 2016

    Keywords

    • Foreign direct investment
    • Strategic management
    • International business
    • Transaction costs
    • Multinational companies
    • Cross-border takeovers

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