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The Foundations of International Business: Cross-Border Investment Activity and the Balance between Market-Power and Efficiency Effects

Clougherty, Joe and Kim, Jin Uk and Skousen, Bradley and Szücs, Florian (2016) The Foundations of International Business: Cross-Border Investment Activity and the Balance between Market-Power and Efficiency Effects. Journal of Management Studies, 54 (3). pp. 340-365. ISSN 1467-6486

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Abstract

The foundational international business (IB) scholarship grappled with whether multinational enterprises (MNEs) are largely efficiency-enhancing or market-power inducing institutions. Contemporary scholarship, however, often associates foreign direct investment (FDI) with efficiency-enhancing properties and thus neglects the market-power interpretation of the MNE. Such an imbalance is problematic given that the theoretical and empirical justifications behind the field's embrace of the efficiency interpretation are not fully evident. Instead, both efficiency and market-power effects are seemingly present in cross-border investment activity. Based on a comprehensive sample of up to 4,361 cross-border investments materializing between 1986 and 2010, we present theoretically-grounded hypotheses with regard to when market-power effects will tend to dominate efficiency effects. We find that cross-border investments undertaken by emerging-market MNEs in both developed and emerging markets tend to involve substantial efficiency effects and minimal market-power effects when compared with the cross-border investments undertaken by developed-country MNEs in both developed and emerging markets.

Item Type: Article
Additional Information: This is the peer reviewed version of the following article: Clougherty, J. A., Kim, J. U., Skousen, B. R. and Szücs, F. (2017), The Foundations of International Business: Cross-Border Investment Activity and the Balance between Market-Power and Efficiency Effects. Jour. of Manage. Stud., 54: 340-365, which has been published in final form at http://dx.doi.org/10.1111/joms.12205. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Keywords: emerging markets / FDI / international acquisitions / multinational enterprise / theory of FDI
Divisions: Departments > Volkswirtschaft
Departments > Volkswirtschaft > Quantitative Volkswirtschaftslehre
Version of the Document: Accepted for Publication
Variance from Published Version: Typographical
Depositing User: Elena Simukovic
Date Deposited: 05 Sep 2017 17:20
Last Modified: 05 Sep 2017 18:04
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/76674/
URI: http://epub.wu.ac.at/id/eprint/5729

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