Managing the Internalisation Process: A Theoretical Perspective

Bent Petersen, Lawrence S. Welch, Gabriel R.G. Benito

    Research output: Working paperResearch

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    Abstract

    Internalisation theory informs us about why and when multinational enterprises (MNEs) internalise foreign operations, but has less to say about how the internalisation should be prepared and exercised when foreign market operations initially are carried out by local, outside agents. Drawing on insights from managerially-oriented literature, this paper explores the role of management in situations where the market transaction costs of using outside agents are negligible at market entry, but grow over time. A key question pertaining to this situation is: what management instruments may ensure persistent concurrence between changing pressure for internalisation in a foreign market and the effectuated internalisation of an MNE in that market? Management instruments and strategies that potentially support ‘staged internalisation’ include appropriation of the local outside agent’s financial assets (including equity) as well as non-financial assets in relation to user rights, customer relations, and value added activities.
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherCenter for Strategic Management and Globalization
    Number of pages29
    ISBN (Print)9788791815201
    Publication statusPublished - 27 Feb 2008
    SeriesSMG Working Paper
    Number7/2008

    Keywords

    • Internalization
    • Multinational enterprises
    • Management

    Cite this

    Petersen, B., Welch, L. S., & Benito, G. R. G. (2008). Managing the Internalisation Process: A Theoretical Perspective. Center for Strategic Management and Globalization. SMG Working Paper, No. 7/2008