The Global Value Chain and Internalization Theory

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

*Corresponding author for this work

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Abstract

In a research note in this issue, Strange and Humphrey discuss how a global value chain (GVC) approach serves to usefully move internalization theory towards a better understanding of the increasingly important ‘middle ground’ between markets and hierarchies in the contemporary highly globalized international business scene. After a brief recount of their main arguments, we argue that their discussion needs to the extended, as it does not adequately recognize important differences between internalization theory and the GVC approach. Specifically, the approaches differ on the notions of efficiency, opportunism, and level of analysis. We then argue that internalization theory can benefit from the systemic view implied in the GVC approach, and discuss the role of trust as a coordinating mechanism in international business. This leads to a more general discussion of internalization theory and the difficulty of encompassing dynamic considerations such as learning and foreign operation mode combinations and flexibility within value chain interdependencies. We conclude with a research agenda that flows from our discussion.
Original languageEnglish
JournalJournal of International Business Studies
Volume50
Issue number8
Pages (from-to)1414-1423
Number of pages10
ISSN0047-2506
DOIs
Publication statusPublished - Oct 2019

Bibliographical note

Published online: February 7, 2019

Keywords

  • Foreign operation modes
  • Global value chains
  • Internalization theory
  • Multinational corporations

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