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The Bundling Model and its Implications for International Business Research

  • Date: Thursday, June 14, 2018
  • Time: 9:00 AM - 1:00 PM
  • Venue: Room N202
  • Location: UCD Smurfit School, Carysfort Avenue, Blackrock, Co. Dublin.

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The Bundling Model and its Implications for International Business Research

 Both Anderson and Gatignon and the Uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises (MNEs) arbitraging control and risk and increasing their commitment as they gain experience in the target market. OLI and internalization models do recognize that foreign market entry requires the bundling of MNE and complementary local assets, which they call location or country-specific advantages, but implicitly assume that those assets are freely accessible to MNEs. In contrast to both of these MNE-centric views, I explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and MNEs. By looking at the relative efficiency of the different markets in which MNE and complementary local assets are traded, and at how these two categories of assets match, I am able to predict whether equity will be held by MNEs or by local firms, or shared between them, and whether MNEs will enter through greenfields, brownfields, or acquisitions. I will show how this bundling model has interesting implications for the nature of equity joint ventures, the evolution of the MNE footprint in host countries, and for the reasons behind the growth of MNEs from emerging market countries.

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