The Development of International Business Theory: Implications for International Business Teaching and Research in Colombia Cuadernos De Administración, Núm

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Fuerst, Sascha The development of international business theory: implications for international business teaching and research in Colombia Cuadernos de Administración, núm. 43, enero-junio, 2010, pp. 33-51 Universidad del Valle Cali, Colombia

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How to cite Complete issue Scientific Information System More information about this article Network of Scientific Journals from Latin America, the Caribbean, Spain and Portugal Journal's homepage in redalyc.org Non-profit academic project, developed under the open access initiative Carrera 49 No. 7 Sur 50. Universi 50. 49 7Sur No. Carrera Finlandia. Maestría en Ingeniería Ingeniería en Maestría Finlandia. Profesor Asistente, Departamen Asistente, Profesor Según Clasificación Colciencias Clasificación Según to de Negocios Internacionales, dad EAFIT. Medellín-Colombia. EAFIT. dad de Kaiserslautern, Alemania. Artículo Tipo 3: de revisión revisión de 3: Tipo Artículo Administrativa, Universidad Estudiante de Doctorado en Turku School of Economics, Negocios Internacionales. aprobación: de Fecha corrección: de Fecha [email protected] recepción: de Fecha Medellín -Colombia Medellín Universidad EAFIT, Universidad febrero 18 2010 18 febrero marzo 30 2010 30 marzo Sascha Fuerst Sascha abril 20 2010 abril - - negocios internacionales en Colombia en internacionales negocios delos einvestigación docencia la para implicaciones E and research in Colombia teaching business international for implications theory: business international of development The Abstract l desarrollo de la teoría de los negocios internacionales: internacionales: negocios delos teoría dela l desarrollo nally in the context of Latin-America. of context the in nally internatio and country the in under-researched a clearly - phenomenon firms Colombian of behavior internationalization the research to level, postgraduate the at especially students, for motives provide to theory in business their international curriculum include to strengthen programs its epistemological businessinternational basis and research for directions new Furthermore,suggestedisit that universities gives Colombiain thatoffer article the regardinginternationalizationthe phenomenon developments, Colombianof firms. theoretical these on Building firm. multinational the to theory institutionalization links that 2006 from Engwall by contribution a with ending and 1960 in contribution seminal Hymer’s with beginning theory business nal internatio of development the about overview an provides article The Keywords: international business, international business theory, teaching, curriculum, Colombia, Latin America. Latin Colombia, curriculum, teaching,

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El desarrollo de la teoría de los negocios internacionales: implicaciones para la docencia e investigación de los negocios internacionales en Colombia The development of international business theory: implications for international business teaching and research in Colombia

Resumen El artículo resume los principales desarrollos teóricos de los negocios internacionales, inicia con la contribución de Hymer en 1960 y termina con la de Engwall de 2006, en la cual se relaciona la teoría institucional a la empresa multinacional. Al considerar estos desarrollos teóricos, el artículo muestra nuevas perspectivas para investigar el fenómeno de la internacionalización de la empresa colombiana. Además, se invita a las universidades colombianas que ofrecen programas en negocios internacionales a que incluyan las respectivas teorías en sus currículos para fortalecer su base epistemológica y motivar así a sus estudiantes, especialmente de posgrado, a investigar el comportamiento de internacionalización de la empresa colombiana, un fenómeno poco investigado en el país y a nivel internacional en el contexto Latinoamericano. Palabras clave: negocios internacionales, teoría de los negocios internacionales, enseñanza, currículo, Colombia, Latinoamérica. Sascha Fuerst Sascha The development of international business theory: implications for international business teaching and research in Colombia

35 1. Introduction a complete presentation of all the developments that happened since 1960. For instance, the article does not refer to the recent international development of international The entrepreneurship phenomenon that is the rapid business theory can be traced back to internationalization of often small or micro enter- the Canadian economist Stephen Hymer prises. Nevertheless, many of those “newer” ten- who, in 1960, submitted his Ph.D. thesis dencies build on the general models, paradigms at the Michigan Institute of Technology or theories that developed since the 1960s. under the supervision of Charles Kindle- The article therefore has three intentions: 1) To provide a general overview of the development of berger. Before that, international busi- international business theory for the interested ness activities were largely explained reader; 2) To critically question how international by (international) trade and capital flow business is taught at universities in Colombia; 3) theories. Hymer’s seminal contribution To provide new directions for research regarding was the first attempt to explain foreign the internationalization phenomenon of Colom- direct investment on the firm level. Hen- bian firms. ceforth, international business theory From a methodological perspective, the put the firm at the centre of analysis and review of international business theory is mainly economic theory was the main basis used inspired by Forsgren (2008) and Rugman and to explain foreign direct investment as Brewer (eds.) (2001). Those readings provide the expressed in the internalization theory fundamental framework for the article which the and the OLI paradigm in the 1970s. present author complemented with additional sources and contrasted with other review articles Raymond Vernon’s product cycle and by Weisfelder (2001) and Björkman and Forsgren international investment approach from (2000). 1966 can be viewed as an exception to international business thinking at that time focusing rather on the country and 2. The development of international trade theory than on the international business theory firm and economic theories. During the The development of international business 1970s, a group of Scandinavian scholars theory is presented according to its key concepts put more emphasis on the internationa- and main contributors. It follows a chronological lization process linking it to the beha- order with the year of publication of the first con- vioural theory of the firm. From then on, tribution to the key concept of its main author(s) firm internationalization theories were as principal criteria (please refer to the table in the appendix). However, and due to space limita- not only put forward by economists but tions of the article, some key concepts and main increasingly by business strategists, contributions that appear within the table in the organizational theorists, economic geo- appendix are not further outlined. graphers and political scientists.

This article reviews the development of 2.1. First modern theory of the international business theory beginning with multinational enterprise Hymer’s seminal contribution in 1960 and ending with a contribution by Engwall from 2006 In 1960, the Canadian economist Stephen that links institutionalization theory to the Hymer (as cited in Dunning, 2001, p. 37, Hymer multinational firm. This, of course, cannot be 1960) submitted his doctoral thesis “The Inter- 2010 • Enero-Junio 43 • No. Valle del • Universidad de Administración Cuadernos 36

FernandoSascha Fuerst Urrea Giraldo 2.2. Internalization theory Internalization 2.2. principle (Forsgren, 2008, p. 27). 2008, (Forsgren, principle headquarter overriding the the strategy by rate is corpo over control Full levels. lower by executed be to down passed orders and headquarters corporate a clear hierarchy are where strategies decided by the 2008, p. 25, Hymer 1970). Thus, the MNE represents (as cited in the world” Forsgren, see almost can they clear skyscrapers; day, of tops a the on fromrule sed as, “In the giant corporationexpres further of was today,MNE the of power The size. managersfirm increasing of law economic development theuneven and of law the development: of laws basic two world. This was expressed by Hymer (1970) through neverthelesscausingtensions conflictsand the in international organization, industrial of structure somekind ofoligopolistic equilibrium within newa eventually Europe, will achieveUnited and States giantfirms from both side of the ocean, namely the under the state but alongside 8-9, pp. it or above 2008, it, andHymer1970) that Buckley, argued & that the MNE does Ghauri not operate in Hymer cited research. (as his of theme central the MNE the as of implications put welfare Hymer economic the thesis, doctoral his finishing After to aim rentability. economic the maximum with a appropriate country host the in exploited and market home the in imperfections market through created are advantages, monopolistic them, calls (1969) Kindleberger as or vantages ad firm Those economies. cost and scale and advantages knowledge ownership rights, the proprietary as of such imperfections market structural through result that relates advantages Bain- type to MNE Hymer Dunning, the of 1956), power in specific asset Bain the cited 37-38, (as pp. Bain 2001, Joe industrial economist, leading a of work the by Strongly influenced analysis. the of investments centre the at strategic the abroad of firm’s the theory a putting create firm to attempt thesis his first a Thus, se. was per MNE) a (the firm on the to based investment discussion flows of portfolio theory financial neoclassical direct the foreign shifted from Hymer for analysis, construct his fundamental the as theory organiza tion industrial Using (MNE). enterprise multinational the of most theory modern a of which pment Investment”, develo the of beginning the consider scholars Direct Foreign of study a Firms: National of Operations national a a e development. new Increased a attentionsaw was During1970stheinternational business theory - - - - - internalization theory that the MNE exists exists MNE the that theory of proponents the internalization by argued generally reduced. is substantially It or eliminated be can costs transaction those firm, same the and one within out of carried now is costs coordination transactions business the If 133). transaction p. 2001, hence, (Hennart, costs, and components enforcement, bargaining four information, positive Those incur behavior cheating. opportunistic through motivate information might that market the imperfect in customers and suppliers about through limitations cognitive represents rationality Limited ficity. speci asset and contracts long-term through a of operations and because resources relationships mutual adaptationof their into locked are transaction business a in counterparts the that control. Small-numbers antici orpate bargaining cannot means advantage monopolistic a of owner relateschangesthetoenvironment the in thatthe rationalityopportunisticand behavior. Uncertainty uncertainty, small-numbers existence of bargaining, the limited as imperfections) market on (based interpretsachmainreasonmarket theforfailures appro cost Williamson’s transaction approach. cost internalization theory is based upon the transactionMcManus(1972). Nevertheless,saidthatbe can it (1976)and Hennart (1977, 1982), himself inspired Cassonindependently and Buckley by developed by fact in was but (1975), Williamson with originate not that the transaction (cost/internalization)cost theory approach. did Hennart (2001, p. 132) contextthoughresulting arguesinWilliamson’s (1975) transaction Coase(1937) and later reinterpreted inbehaviorala tionofimperfect markets wasinitially proposed by internaliza 41-42).pp. The 2001, (Dunning, markets thesearguments imperfectionsare externalthe in than hierarchies rationales behind The markets. external MNE through within efficiently more cross-bordertransactions ofintermediate institution coordinates that anproducts as seen berather for foreigndirect prerequisite investment necessary andthattheMNE should a not were advantages exponents of internalization theory arguedthe indigenous that suchfirm in the host country, over the advantages) leading (monopolistic advantages possesses unique firm internationalizing the MNE, the of view Hymer’s in Whereas firms? 40). (Dunning, p. 2001, foreign with transactions contractual or another country, rather than engage in arm’s in lengthone countryheadquartered prefer firms to own value-adding do why activities in activity: replacing explaintheforeign production offirms as marketa inquiry central abroad. toties came theme of The activi added value its extend to desire the behind giventotheMNEaninstitution as andthe reasons - - - - - 2.3. Oli paradigm contextually related theories and can thus be be thus p. 43). (Dunning,2001, eclectic called can and theories related different contextually integrates paradigm The Specific). (I market the through openly than rather tment those with of by foreign based assets foreign direct inves these combine to advantages cific spe O the possessing firms the of advantage internalization the and specific), (L assets tary complemen providing of in countries advantage particular geographical the MNE specific), the (O of advantage ownership competitive the factors: inter-related three of juxtaposition the on rests paradigm OLI The paradigm. OLI the forward put he where Stockholm, in 1976 in Symposium by Nobel a at initially addressed (1977), Dunning was issue This internationally. operate should firm the the answer “where” of to question able are theory internalization nor advantages monopolistic neither However, preferred. become operations foreign of zation to prefer operate via the firms market and do when does internali situations which “how” in — the factor stresses theory Internalization ge. advanta specific a possess is firms — investment possible foreign “why” explained (1960) • Efficiency seeking foreign direct inves investment: direct foreign seeking Market • direct foreign seeking resource Natural • four for production: international of advantages types different location key of Dunning’s tification of contribution eclectic paradigm in its tostrengths allow iden important an see becomes the rationale behind the creation of of creation p. 49). 2008, (Forsgren, MNE the the behind rationale the becomes behavior across cost-minimizing a Therefore, markets borders. internalizes firm the because According to Forsgren (2008, p. 46), Hymer Hymer 46), p. (2008, Forsgren to According not related to low labor costs in this form form this are in costs labor advantages low to related location not key the tment: location notably, specific. industry Most actually climate, are advantages others. investment and among barriers, trade profile market etc.), competitors, of country’s number size, (market host characteri the by are zed advantages location the content. intensive technology low labor a ex with or products and based resources, resource natural port source cost attractive low an country of are they host if in locations invest firms investment: 158-160) pp. (2001, Verbeke and Rugman ------process of the firm Internationalization2.4. created advantage (Forsgren, 2008, p. 48). 2008, (Forsgren, advantage created endogenously an but exogenous an not is tage advan location the and competence-creating, is to itself the mainly network Thus, FSA exploiting. as contrast in seen networks rather dispersed are geographically now MNEs as millennium more new the a of start the got with interpretation dynamic CSAs and FSAs between interplay The countries. host in assets complementary of clusters immobile the and MNEs of FSAs bound the non-locations process between development he the highlights spatial in proximity the knowledge Furthermore, materials. raw labor cheap or low costs than facilities institutional and ture now are infrastruc excellent MNEs an by attracted Hence, more much 1990s. and 1980s the during asset key a as the knowledge of emphasizes emergence Dunning 160-162), pp. (2001, Verbeke and Rugman Accordingto past. the over changed have CSAs how consider to important foreign is it sense, this In place. if takes investment direct determine (CSA) advantage (location) country specific host a and (FSA) advantage inves direct foreign seeking asset Strategic • Uppsala internationalization process model model sequential describes U-model process The (U-model). internationalization the Uppsala as known also is model and This Cyert (1963). by March forward put as firm the of theory on the behavioral others, among based lization, the their developed process model of internationa theory, (1977) economic Vahlne and Johanson scholars on Swedish based paradigms put their forward internationalization theories/ and Dunning Hennart, and Casson, Buckley that The interplay between a company’s specific specific company’s a between interplay The system. innovation especially localized a to linked if capabilities, development and research to access the in instance for advantage rests location key The ventures. joint or acquisitions through firms foreign of sets to secure as tries the MNE investing tment: advantages. location ownership through their advantages complement to want that MNEs for factors important All institutions. supporting of presence the and velopment de technology infrastructure, appropriate an of location form the in expressed Besides, are advantages economies. rather scale but local investment of presence the with markets large to refer direct foreign of During the same years between 1976-1977 1976-1977 between years same the During

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FernandoSascha Fuerst Urrea Giraldo is expressed as the liability of of distance liability the as Psychic expressed is markets. foreign in ope current rations of experience its from learning through time over insight deepening a gains 1. 1. – defensive or passive as firms treating model the as characterize others and limiting extension, factor a as or geographical commitment market increased anymore considered cannot be knowledge of lack that behavior; criticize others managerial define to inability its of fact the stress or deterministic scholars as it described Some criticism. received also it less, Neverthe studies. empirical of number a in large extensively tested and reviewed been it for has and models internationalization U-model firm predominant the understanding the of years, one the became over 285-286), 212). p. pp. 2002, (2002, Johanson and Hadjikhani Johanson, to According & (Vahlne growth firm risk continuous through and achieved profitability long-term uncertainty secure to actors the by by management characterized model the of are assumptions The critical underlying path-dependence. involves is and model the dynamic Hence, 105). time p. 2008, over (Forsgren, commitment market increases and market that in investments future determine investments resulting a the and market about country’s knowledge Experiential market. fo reign that in doing presence by active through learning acquired through overcome be only internationalization and that such a canbarrier knowledge towards commitment increased an to main obstacle the of constitutes lack market foreign the that about suggests therefore further V are 40; that p. 2001, (Dunning markets distance psychic in away familiar less to on move gradually then and (countries) with familiar markets are they nearby enter first panies of liability This foreignness. explains why com the larger distance psychic the larger the Thus, 2. 2. an increasing market market increasing an by expressed is Internationalization chain establishment the chain. along distance psychic the and chain two establishment the along dimensions: internationalization incremental or ahlne & Johanson, 2002, p. 212). The U-model U-model The 212). p. 2002, Johanson, & ahlne An increasing market commitment is expressed through an internationalization process that starts with ad hoc exporting, exporting, hoc ad with starts that process internationalization an through expressed is commitment market increasing An The concept of liability of foreignness was originally expressed by Hymer (1960) to explain the necessity of a firm-specific firm-specific a of necessity the explain to (1960) Hymer by expressed originally was foreignness of liability of concept The advantage that is able to offset the liability to operate in a foreign market. foreign in a operate to liability the offset to able is that advantage being named a stages-model, based on the fact that the most important change aspect of the model is learning and the the 212). p. and 2002, is Johanson, learning & (Vahlne is model model the importance no of are of their modes aspect entry that change specific resist important most the continuously that fact Johanson the on and based Vahlne stages-model, a named Nevertheless, being modes. entry of be stages can process This different site. to manufacturing related sales own an own of an form in of investment establishment direct the foreign by with up followed end might market, and foreign organization the in agents through exports regular to on moves then commitment foreignness 1 as the firm firm the as 2 - - - - . 2.5. Net work approach to to approach internationalization work Net 2.5. a as uncertainty. to decrease defense understood rather is internationalization ness partners’ capabilities developed through through developed capabilities partners’ ness busi about knowledge as knowledge market and network the in relationships business cific com mitment can be seen market as the commitment to interpretation: spe different knowledge a need market and commitment however, market theory, network business In earlier. described as U- the internationalization firm of in model characteristic important an also is learning Experiential 104). p. 2008, is (Forsgren, markets asset foreign a by firm-specific compensated about therefore knowledge of and lack advantage firm-specific a the for is exploitation internationalization for driver main the where MNE Hymer’s to contrast sharp in is This ia cmoet o fir for component vital a becomes learning experiential Thus, foreign market. the in experience acquired be first-hand a only through can and networks business foreign about acquisition basically knowledge is by driven Internationalization theory. work net business in role major a plays Knowledge company. the for asset intangible an constitute and thus, development, competence a for firm’s for importantly more vital but only marketing, and not sourcing are relationships Business account cases. most in sales customers firm’s a of cent per 80 the for of cent per 20 is, that generate their from profit just a few customers, firms most that found of They relationships. importance such the confirmed (1986) Valla and Turnbull studies and (1982), Hakansson empirical by published 103), p. (2008, According Forsgren to customers. and suppliers between relationships long-lasting on The built firm the for internationalization. environment the represents network of business the for model construct network underlying the is business international Johanson, and marketing & industrial in 1982) Hagg (e.g. researchers Swedish Business network theory as developed by by developed as theory network Business m internationalization. internationalization. m - - - - national enterprise enterprise national 2.6. Contingency of the multi theory uin Jhno ad Vahlne and Johanson bution, contri latest their In 212). p. 2002, & Johanson, the (Vahlne relationships business incorporated of thus, concept and and company a counterparts, its between activities business critical of aspects exchange of consider importance business to the U-model the 1990 the in view introduced network (1990) Vahlne Johanson and studies, empirical on Based 106). p. 2008, (Forsgren, partners these with exchange 2008, pp. 108-111). 2008, (Forsgren, transactions simply arm’s-length of or consist exchange, knowledge and resources, of activities adaptation mutual a of terms in close very are that relationships embedded as characterized are actors different the Relationships between rather environment. business institutional their than by affected mainly context. network are the within network actors business all business Hence, by respective influenced their highly subsidiaries of coupled network loosely less or more a of consists but entity a single just not is MNE the view, of point theory network a From business presented. was U-model initial the have when 1977 that since made been theory, network business advances, mainly in theoretical and practices in business changes the considering process nalization their business model network of the internatio present and the further even U-model 1977 the 3. 3. stra necessity firm’s the of adaptation the continuous a of claims that theory with contingency introduced is fit strategic relates. of firm concept the The which to environment nature the the on of depends best firm the a that organize to and way effective, equally comare a pany organizing of ways all not a that organize to firm, way best one no is specifically there strategic that expresses the It firm. on the of behavior environment the of impact the about propositions formulate and nization orga the up open to tries therefore theory cy does MNE the where Contingen environment. the with interact not system closed rather of a views represent both theory internalization The article is part of the Journal of International Business Study 40 years and Academy of International Business 50 years years 50 Business International of Academy and years 40 Study Business International of Journal the of part is article The progress of internalization theory over the last 30 years, and Jean-François Hennart regarding foreign market entry as a as entry view. market cost foreign atransaction from regarding assets local and Hennart MNE of bundling Jean-François and the years, of 30 last review the a over with theory Casson Mark and internalization of Buckley progress Peter from contributions interesting includes also that issue anniversary Hymer’s (1960) perspective of the MNE and and MNE the of perspective (1960) Hymer’s (2009) 3 revised revised ------and uniform organization-wide structures and and structures organization-wide uniquely uniform and treated is such In subsidiary each network. approach to differentiated a approach as emphasized (1997) MNE the is Nohrias’ and level Ghoshal by subsidiary the on way profound more a in theory contingency of tion applica The 97-98). pp. 2008, (Forsgren, ters of headquar corporate the centralization in to decision-making lead rather environment the the in changes within while subsidiaries to making decision- portfolio of of decentralization a to form leads product MNE the in extensive complexity an of degree high a for A as need overload environments. the dynamic and complex of result information and between coordination tension to the solutions offer reduce to tries the view information- which processing the in Besides, managed. way is the firm and strategy environment the and between required is fit organization. a the Hence, within capacity processing information- and faces the the respective firm that information-processing required the ween A decision-making. fundamental assumption is products the difference bet efficient about for markets information and process the to of capacity firm the stresses view This pp. 78-79). 2008, (Forsgren, 1988) Egelhoff (see 1988 Egelhoff’s is from MNE Wells the of view and information-processing Stopford of organizational the on findings its building study of subsequent A structure. adaptation gradual requires firm a multi-market or to multi-product firm a domestic one-product, a development from a firm a of that revealed that 1972) firms Wells, US & of Stopford (see seminal 1972 Wells’ from and study Stopford was theory MNE the contingency to applied that studies first the of One ones.” endogenous are ganization or formal and strategy while variable, nous exoge the is environment The environment. firm multinational means that the isthe firm a primarily of victim the to of theory application “the contingency 98) p. (2008, Forsgren to According 71-74). pp. 2008, environ (Forsgren, ment the in challenges new to basic structure their adapt firms that showed that tions study 1962 from (see Chandler, 1962) of US corpora Chandler’s to contingency back of traced be can theory development The versa. vice not and environment, the in changes to tegy ------

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FernandoSascha Fuerst Urrea Giraldo multinational enterprise multinational the of theory Evolutionary 2.7. im s u frad y atel 18) and (1989), Cantwell by forward the put as of of firm theory creation evolutionary of the hierarchies, characteristic distinct their because of superior are firms that claims theory internalization that way same The by 56-60). 2008, pp. (Forsgren, competencies context new new intention a in investing the develop and with learn activity to creation as value hand other a the on and exploitation) (value advantage specific firm a of exploitation an as hand one the on interpreted is OCT in tment inves direct Foreign involved. is knowledge tacit of degree high a external when an and especially firm partner, a the be between can effort joint competencies the core of sense, that In development 1990). Hamel, & firm (Prahalad a competence that core its OCT develop and of sustain view must the on firms based is This between ventures. joint and alliances cooperation strategic as such recognizes of also forms OCT other country another Nevertheless, in market. embedded are petences which com in and capabilities unique context company’s the human original and an maintain to organizational necessity the by cau sed namely place, takes investment foreign direct why of perspective another offers OCT Thus, personnel. key of transfer or context nal organizatio the replicating often is without difficult markets country other to those of advantages transfer the or replication within A company. relationships team and in teractions social complex in embedded mainly and to processes organizational and related managerial are its competences) and (i.e. capabilities advantages 43). specific p. firm that 2001, argues OCT (Dunning, (OCT) theory pability ca organizational on based is enterprise nal headquarters and the subsidiary (Forsgren, (Forsgren, subsidiary pp. 86-98). 2008, the and between interests headquarters and goals common define to introduced are values shared However, ries. subsidia in decision-making autonomous for room leaves in This but subsidiary. not respective headquarters the is corporate of in decision-making that centralized than subsidiaries, complex other more is subsidiary’s a environment if Besides, subsidiary. each unique linkages corporate between headquarters requires and This subsidiary. every for ted centralized control systems cannot be replica The evolutionary theory of the multinatio the of theory evolutionary The ------developed continuously over time. over continuously developed its of employees, mixture its a and with processes in organizational lying community competence social core a its and knowledge repository a of as firm the depicts MNE pp. the of theory 2008, evolutionary the summary, (Forsgren, In 61-63). environments country different from competence knowledge extracting for technological and accumulating for mechanism natural a are cooperation of forms different coreoriginal Therefore, capabilities. MNE’s the and of sub-units its of environment advantages the location-specific between play of core competences over time through the inter In development the allows units “outsiders”. production of network with dispersed MNE’s the view, Cantwell’s cooperation of forms different of importance the stresses however, MNE, the of view evolutionary Cantwell’s ture). allianceven joint and (e.g. strategic peration coo firm (outside) of possibility the consider from differs the firm general OCT in that it the does not of view Zanders’ and this Kogut In regard, firm. same the of individuals channels among communication common and tegies same ners due to the the shared view on and goals stra of part external and MNE the among sub-units than firm) Such (between MNE the transfer. same within by efficient more is however, countries transfer, knowledge different of from combination the through over time further exploit can MNE the that vantage ad sociological a possesses firm the Hence, knowledge). (social organization the within routines in and in individuals embedded of is competence the knowledge Such firm. the of the competence In primary the is knowledge latter, respectively. community social units, its and production of networks dispersed cally geographi its of because superiority firm’s a characterizes 1993) (1992, Zander and Kogut the multinational enterprise multinational the and theory Institutionalization 2.8. MNE influences the institutional environment. the institutional influences MNE the way the on hand, other the on and MNE, the of of behavior the impact on environment the institutional the on hand, one the on to light, shed tries now theory Institutionalization texts. con different to exposed naturally is MNE Thus, the agencies. institutional of contexts variety a pluralistic with or fragmented constitute countries Different actor. political a of role the Institutionalization theory assigns the firm firm the assigns theory Institutionalization ------6. 5. 4. by proposed as MNE the of role • political The at isomorphism for pressures Conflicting • pro as policy of transfer Cross-national • fo inquiry: of the themes three llowing to MNE the of context the in been applied has mainly theory institutionalization Havila et al. (eds.) (2002) features contributions by Ghauri and Buckley (2002) and Forsgren (2002) claiming that societal societal that claiming (2002) Forsgren and (2002) Buckley and Ghauri by contributions features (2002) (eds.) al. et Havila Programs related to international relations ( relations to international related Programs Rugman and Brewer (eds.) (2001) contains a complete part related to the political role of the MNE. Kobrin (2001) for instance role of to (2001) for Kobrin instance the related the MNE. a political and (eds.) part (2001) contains Brewer Rugman complete nal business undergraduate and graduate programs have different denominations, such as such denominations, different have programs graduate and undergraduate business nal mercio internacional mercio MNE strategy, and Spar (2001) takes a stance in the middle, recognizing both the power of MNEs influencing politics but but MNE. the shaping politics nation-states of influencing impact the MNEs also of power the both recognizing middle, the on in stance a investments takes of (2001) Spar regimes and (1971) strategy, multilateral MNE of Vernon’s impact with the line emphasize in however, much (2001), Young system, and Brewer political bay. at international sovereignty the on MNE the of influence increasing the recognizes nal contexts of countries. In some cases, cases, some In countries. of contexts nal institutio different the in players political active considered are MNEs (2006): Engwall legitimacy its strongly, environment. lose institutional local the too within might prioritized subsidiary the is system rate corpo the to conformity if or adaptation, disintegration of risk over- through network MNE wider the from the with ronment, envi can institutional local the subsidiary to adapt now The subsidiaries. and other headquarter of including se comprised per MNE the environment the is it hand, other the on and environment, country host subsidiary’s pull the is it hand, one the On it. isomorphic on trigger can that ronments envi different two to exposed is MNE an and Blu Nigh (2002):mentritt ofthe subsidiary by proposed as level subsidiary the with negotiations transfer. of terms their the about the headquarters for in base distance power subsidiaries a constitute Institutional also can their location. in possessed original they functionality lose the might and occur reshaped are practices practices and transferred of hy in a bridization cases located some In countries. subsidiaries different to hinders headquarters countries, from policies and practices of transfer the between cognitive (1999): institutions and normative Zaheer regulatory, differences the is, in that and distance, Kostova institutional by posed 131-137), pp. (2008, Forsgren to According network structure of the MNE because of its rather preferable structure from a socioeconomic point of view. of point asocioeconomic from structure preferable rather its of because MNE the of structure the network favouring and business, international of agenda research the in importance increased gain MNE the to related issues y negocios internacionales. y negocios y Comercio internacionales y negocios Marketing internacional, y comercio Finanzas internacionales, y negocios Economía , Comercio exterior Comercio , Finanzas y negocios internacionales y negocios Finanzas relaciones internacionales relaciones ------text. with con institutional local the of power knowledge experience and first-hand its to negotiational due its headquarters of that use and makes environment entity entire the organic regards that sociological, a coupled as viewed be loosely can perspective theory zation in Colombia in business teaching and research international for Implications 3. support them. As in other Latin-American Latin-American other in As them. programs to support activities research between academic and relation offered unbalanced an groups GrupLAC research of the directory within science national registered to business related groups international research six are in there des, degrees Science of Besi international business are non-existent. Master and Arts programs of degrees, Master both graduate level, 44 master’s of the on are out two only that Nacional Educación de ( approximately programs graduate comprised of a large variety of undergraduate ( undergraduate of variety large a of comprised tional tional lizaciones pregrados l i al te N fo a institutionali an from MNE the all, in All shape institutional institutional and shape influence to trying MNEs proactive cases, rather are other in and MNE, the of vior the beha impacts context the institutional The Colombian higher education system is is system education higher Colombian The cordance with its own economic cordanceown its with negative more a in ac from the manipulates MNE stance, society and, hand, the other society of the light on values positive the to a adapts in MNE hand, seen, one be can the MNE on the of role societal the ) are not considered within that category. Internatio category. that within ) considered not are business ( and Colciencias ) and graduate programs ( programs graduate and ) , Administracion de negocios internacionales, internacionales, de negocios Administracion maestrías 6 : 161 undergraduate and 44 44 and undergraduate 161 : , 2010). This suggests suggests This 2010). , Negocios internacionales Negocios , 2010). It is notable notable is It 2010). , environments rltd o interna to related ) interests Ministerio Ministerio especia- 4 . Thus, Thus, . , Co

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FernandoSascha Fuerst Urrea Giraldo relations theory course in their their in international course theory an relations include generally that Colom bia in programs relations international 7. 9 8. program business international graduate or under graduate any in taught not is theory business international author, the the to of and knowledge best However, curriculum. their in gies strate mode entry different the covered also new changes in the business environment and the to adapted increasingly programs siness bu International 2010). Maya & & Fuerst 2010; Cordoba, Tascón, Franco & Fuerst direct 2008; Penagos Ramírez, foreign Villa Fuerst, through (e.g. cases, investment some in modes and alliances, distinct strategic and of joint-ventures as use such making markets new increasingly conquered and abroad did venture companies the millennium with new the to Nevertheless, change investment. direct of form in abroad markets in presence establishing physical even or fo partners, with business alliances reign strategic as such modes entry other to exporting themselves committing before through first markets entered 1990s, international early the in liberalization mic econo as the after soon exporter obvious, firms, Colombian an most quite is as This 2007). firm the (Santamaria, on focusing usually is taught firm Colombian the of tionalization Interna country. the in research business nal curriculum, and on the other hand, the focus business of internatio international the within taught is what of content the hand, one the on Colombia: in research international and teaching business to relation in evident inquiry become of aspects two theory, business nal the during offered time. same first the programs with the business in undergraduate international interested of more field became country in the academia then, Since 1990s. early the in liberalization and import reform economic an mented an followed substitution policy of development and imple Colombia countries, . Compare also with the underlying theoretical construct of each key concept within the table of the appendix. the of table the within concept key each of construct theoretical underlying the with also . Compare These statements are based upon the international business curriculum review by Santamaria (2007) and the author’s author’s the and (2007) Santamaria by review curriculum business international the upon based are statements These International relations programs can be compared to international business programs in the sense that the latter often often latter the that sense the in programs business international to compared be can programs relations International include an international relations theory course but no course related to international business theory. business international to related course no but course theory relations international an include might program business international an even So curriculum. their within relations international to related topics include eiwn te eeomn o internatio of development the Reviewing (RCPI) (2006-2009). (RCPI) Internacionales nes the of member active and member founding and (2004-2009) EAFIT Universidad at business international head department as his position during in Colombia education business international into insights personal 7 . This for instance is in contrast to to contrast in is instance for This . curriculum 8 ------. nary over nary multi-discipli more became theory business international of development becomes the that also it evident review the From country. in the under-researched clearly topic a into sights in new provide thus, and work graduation course or their of part as firms Colombian of vior to students motivate research the beha actual internationalization might theory business international of study the Besides, postgraduate programs. for especially curriculum, for the basis profound more a provide would certainly theory business international Teaching • Regarding foreign direct what investment, are monopo of use make firms Colombian Do • studied: be can firms from Colombian of points internationalization the starting where several provides business surely theory international of review business The development the of phenomenon. this to international contributes in doctoral with studies faculty and degrees Science of Master groups, research of lack The lombia. Co in infancy its in still is research business characteristic. considered an important be should curriculum the business of international character this In multi-disciplinary the disciplines.” reach regard, more scholarly even its embrace will half-century, next the in Perhaps, disciplines, strengths. main related its of one of is this and set eclectic an prises com all, Business), after (International “IB it: strategic asset seeking enterprises? seeking asset strategic and efficiency attract to able also country the in Colombia or is investments their for motive asset-seeking market and resource natural a follow only firms foreign Do production? nal to Dunning’s four typesofdifferent internatio related key advantages the location country’s advantage? ownership an as Dunning by and forward put Hymer by described as process tion internationaliza their in advantages listic international mentioned, previously As time 9 or as Dunning (2001, p. 62) put put 62) p. (2001, Dunning as or Red Colombiana de Profesio de Colombiana Red ------4. Conclusion 4. the MNE. Beginning with Hymer (1960), the the (1960), Hymer with Beginning MNE. the to raison their help the that have interpret construct all theoretical views underlying different Those MNEs. of expansion mainly global the explain and how article view about to thinking this of in development a reflects presented as theory Latin-America (Chan, Fung, & Leung, 2006; 2006; 2008). &Seggie, Yalcinkaya, Xu, 2001; Leung, & Vaidya, & Elahee 2008; Crittenden, Fung, & Donoso (Chan, in living Latin-America authors by conferences at international presented papers and region the empirical from on data management findings their and base that business journals international published in articles of scarcity the by shown as research business international in attention le Besides, 2008). has Latin-America Deeds, received comparatively litt 2004; & Peng, Ramamurti, Cuervo-Cazzura, 2007; Yamakawa, Tung, (e.g. & Luo 2008; emerging perspective or country market developing a from tion internationaliza the firm to on literature contribute emerging also but country the in ners Colombian politicians and practitio for academics, firms of phenomenon ternationalization contribute to a understanding of the better in the in context institutional the does How • competen and capabilities specific What • or their adapt firms Colombian do How • expe through acquisition knowledge Does • internationali explain U-model the Does • The development of international business business international of development The eerh n hs aes ol nt only not would areas those in Research and behavior business performance of foreign firms in influence the country? how it and does firms, Colombian of nalization internatio impact country host and home of Colombianthe firm? internationalization the determine ces process? internationalization their face to effectively more structures ganizational behavior firms? some of internationalization the termine de networks business in learning riential markets? similar culturally to nationalize inter rather companies most that sidering con matter to seem distance psychic Does better? firms Colombian of behavior zation d’être and behavior of of behavior and ------ched in the country and internationally in the the in Latin-America. of context internationally and country under-resear the in ched Colombian clearly phenomenon of a firms, behavior internationalization the theory investigate to business frameworks rich provides level. international postgraduate the Furthermore, at especially those in areas, research student for motives provide to to and basis epistemological curriculum its their strengthen in theory business tional interna include Colombia in universities that suggested is It environment. with MNE (global) the wider its of interplay the research singly increa to but behavioral firm individual the the of consider strategy only not to scholars business international reflect among interest might new a This theory. contingency institutionalization and theory theory, or the wider in political environment as as in network environment business business the purely it are environment, the with it up” confront and “open all firm the MNE the of theory institu the tionalization and network theory the contingency model, contrast, In firm closed-system. the the on a of as mainly focus theory theories Those evolutionary firm. the and least) (partially at paradigm OLI the theory subsequent internalization, of the for the also its analysis are of over centre advantages holds it through Firm-specific rivals. advantage aggressively monopolistic rather a expands MNE hrn, . (1966). Y. Aharoni, Interna (2002). B. Axelsson, & H. Agndal, References5. Björkman, Björkman, I. & Forgren, M. (2000). Nordic inter an J (1956). J. Bain, 437-456).Pergamon. Amsterdam: internationalization on perspectives (Eds.), H. Hakansson, & M., gren, V., Fors Havila, In sediments. relationship of influence The firm: the of tionalization 30(1), 6-25. Studies of Management and Organizations research. business national Press. University Harvard Industries. nufacturing Ma in Consequences and Character Their Business School Press. School Business process. decision ares o e Competition: New to Barriers The foreign investment investment foreign The Boston, MA: Harvard Harvard MA: Boston, Cambridge, MA: MA: Cambridge, International Critical (pp. (pp.

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FernandoSascha Fuerst Urrea Giraldo Stopford, J. M. & Wells, L. T. (1972). L. Wells, & M. J. Stopford, and policies National (2001). L. D. Spar, (1957). Simon, A. H. S. Santamaria, (2007). E Rugman, A. M. & Verbeke, A. (2001). Location, Location, (2001). A. Verbeke, & M. A. Rugman, Rugman, A. M. & Brewer, T. L. (Eds.) (2001). (2001). (Eds.) L. T. Brewer, & M. A. Rugman, Ramamurti, R. (2004). Developing countries countries Developing (2004). R. Ramamurti, cau, . 17) Te hoy f h mul the of theory The (1972). J. McManus, Penrose, E. T. E. Penrose, (1966). (1997). S. Ghoshal, & N. Nohria, evo An (1982). G. S. Winter, & R. R. Nelson, February (16 Nacional Educación de Ministerio Prahalad, C. K., & Hamel, G. (1990). The core core The (1990). G. Hamel, & K., C. Prahalad, Oxford: Oxford University Press. University Oxford Oxford: & business M. international A. of Rugman, (Eds.). L. In T. Brewer, policies. domestic York: in New Macmillan. processes organization. making administrative decision of study a EAFIT. en Colombia internacionales negocios de programas Press. University business nal (Eds.), L. T.Brewer, & M., A. Rugman, In terprise. competitiveness, and competitiveness, the multinational en New York: Basic Books. York: Basic New subsidiaries of ownership and firm the Organization of enterprise: multinational the ness handbook of Oxford internationalThe busi and MNEs: Extending and enriching the the Studies Business enriching and agenda. research Extending MNEs: and cisco, CA: Jossey-Bass Publishers. Jossey-Bass cisco, CA: Press. University Harvard MA: bridge, economic Cam change.of theory lutionary snies.mineducacion.gov.co/men Superior Educación 2010). Toronto: Collier-Macmillan. 66-93). The (Ed.), G. multinational and firm the nation (pp. state Paquet, In firm. tinational tiated network: Organizing multinational multinational Fran San creation. value for Organizing corporations network: tiated Business Review Business competence of the corporation. corporation. the of competence Blackwell. Basil Oxford: theof firm. . Oxford: Oxford University Press.. University Oxford . Oxford: Sistema Nacional de Información de de Información de Nacional Sistema The Oxford handbook of internatio of handbook Oxford The [Data file]. Medellín: Universidad Universidad Medellín: file]. [Data (pp. 150-177). Oxford: Oxford Oxford Oxford: 150-177). (pp. , 90(3), 79-93. , 90(3), Administrative behaviour: behaviour: Administrative , 35(4), 277-360. , 35(4), The theory of the growth growth the of theory The Journal of International International of Journal . Retrieved from http:// from Retrieved . studio comparativo de comparativo studio The Oxford handbook handbook Oxford The (pp. 206-231). 206-231). (pp. The differen The Managing Managing Havard Havard ------. ale J E & oasn J (02. e te New (2002). J. Johanson, & E. J. Vahlne, (1986). (Eds.) P. J. Valla, & W. P. Turnbull, by transfer Technology (1977). J. D. Teece, enn R (1971). R. Vernon, investment International (1966). R. Vernon, ilas J H (99. h ter o interna of theory The (1929). H. J. Williams, Internationalization (2001). C.J. Weisfelder, Xu, S.; Yalcinkaya, G. & Seggie, S. H. (2008). (2008). H. S. Seggie, & G. Yalcinkaya, S.; Xu, M (1975). E. O. Williamson, aaaa Y; eg . . Des . L. D. Deeds & W. M. Peng Y.; Yamakawa, Strategies for international, industrial industrial international, marketing. for Strategies know-how. costs technological Journal Economic resource transferring the of firms: multinational rcse? n aia V; osrn M & M. Forsgren, V.; (Eds.), H. Hakansson, Havila, In processes? business internationalization new and new environments companies, new chnology, 190-207. product the in cycle. trade international and terdam:Pergamon. Ams 209-227). on internationalization (pp. in International Marketing (book series), series), (book Press. 13-46).Vol. 11JAI (pp. Amsterdam: Marketing International in firm the of internationalization (Eds.), P. Matthyssens, C.N. & Axinn, In tradition. research a of ment Develop enterprise: multinational the and Books. York: Basic fic Journal of Management of Journal fic leading journals. business in international institutions and authors Prolific Macmillan. York: Press, Free New zations. A study in the economics of internal organi implications: antitrust and Analysis chies: Journal reconsidered. trade tional Practice developed economies? to emerging from nationalize inter to ventures new drives What (2008). 80, 80, Economics, of Journal Quarterly , 39(154), 195-209., 39(154), , 32(1), 59-82. Beckenham:Helm. Croom Entrepreneurship Theory and and Theory Entrepreneurship oeegt a bay at Sovereignty , 87, 242-261. Critical perspectives perspectives Critical arkets and hierar and arkets , 25(2), 189-207. Reassessing the the Reassessing The Economic Economic The , Advances Advances , Asia Paci Asia . New New . ------Appendix Chronological order of key concepts and publications

The following table lists the key concepts that describe the development of international business theory in a chronological order. The year in the first column on the left side relates to the year of the first publication of the main contributing author(s). In some cases, the main inspiring author(s) and publication(s) are also listed. If the information could not be identified it is marked as “not available” N/A in the table.

Year Key concept Underlying theoretical Main contributing Main publication(s) Main inspiring author(s) construct author(s) and publication(s)

First modern theory of the Industrial organization Stephen Hymer * Hymer, Stephen (1960) * Bain, Joe (1956) Barriers multinational enterprise theory The international opera- to New Competition: Their tions of national firms: A Character and Consequen- study of direct foreign ces in Manufacturing investment. Ph.D. disserta- Industries. Harvard 1960 tion, MIT, published by MIT University Press: Cambrid- Press under the same title ge, MA. in 1976. * Hymer, Stephen (1968) La grande firme multinationa- le. Revue Economique, 14 (b): 949-973. Product cycle and interna- International trade theory Raymond Vernon Vernon, Raymond (1966) * Williams, John H. (1929) tional investment International investment The theory of international and international trade in trade reconsidered. The the product cycle. Economic Journal, 39 (154), Quarterly Journal of 195-209. Economics, 80: 190-207. * Kindleberger, Charles P. 1966 (1950) The dollar shortage. Wiley: New York. * Burenstam Linder, Staffan (1961) An essay on trade and transformation. Almqvist & Wicksells:

Uppsala.

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FernandoSascha Fuerst Urrea Giraldo

Year Key concept Underlying theoretical Main contributing Main publication(s) Main inspiring author(s) construct author(s) and publication(s)

Internalization theory Transaction cost theory Peter Buckley & Mark * Buckley, Peter – Casson, * Coase, Ronald (1937) The Casson Mark C. (1976) The future of nature of the ﬁrm. Econo- 1976 the multinational enterpri- mica, 4 (16), 386-405. se. Macmillan: London.

OLI paradigm Industrial organization Jean-Francois Hennart * Hennart, Jean-Francois * McManus, John (1972) theory, location theory, (1977) A theory of foreign The theory of the multina- internalization theory direct investment. Ph.D. tional firm. In: The multina- dissertation, University of tional firm and the nation Maryland. state, ed. by Paquet, Gilles, * Hennart, Jean-Francois 66-93. Collier-MacMillan: (1982) A theory of multina- Toronto. tional enterprise. Universi- * Williamson, Oliver E. ty of Michigan Press: Ann (1975) Markets and Arbor. hierarchies: Analysis and antitrust implications: A study in the economics of internal organizations. Free Press, Macmillan: New York. 1977 John H. Dunning * Dunning, John H. (1977) * Dunning, John H. (1958) Trade, location of economic American investment in activity and the MNE: A British manufacturing search for an eclectic industry. Allen & Unwin: approach. In: The interna- London. tional allocation of * McManus, John (1972) economic activity, ed. by The theory of the multina- Ohlin, Bertil G. – Hessel- tional firm. In: The multina- born, Per-Ove – Wĳkman, tional firm and the nation Per M., 395-418. MacMi- state, ed. by Paquet, Gilles, llan: London. 66-93. Collier-MacMillan: Toronto. Year Key concept Underlying theoretical Main contributing Main publication(s) Main inspiring author(s) construct author(s) and publication(s)

Internationalization Behavioral theory Jan Johanson & Jan-Erik * Johanson, Jan – Vahlne, * Cyert, R. D. – March, J. G. process of the firm Vahlne Jan-Erik (1977) The interna- (1963) A behavioral theory tionalization process of the of the firm. Prentice Hall: firm: A model of knowledge Englewood Cliffs, NJ. development and increa- * Aharoni, Y. (1966) The sing market commitments. foreign investment decision Journal of International process. Harvard Business Business Studies, 8 (1): School Press: Boston, MA. 23-32. * Penrose, E. T. (1966) The 1977 theory of the growth of the firm. Basil Blackwell: Oxford.

Reĳo K. Luostarinen * Luostarinen, Reĳo K. N/A (1979) Internationalization of the ﬁrm. Academie Oeconomicae, Helsinki School of Economics: Helsinki.

Network model of interna- Business network theory Jan Johanson & * Johanson, Jan – Matts- * Hakansson, Hakan (ed.) tionalization Lars-Gunnar Mattsson son, Lars-Gunnar (1987) (1982) International Interorganizational marketing and purchasing relations in industrial of industrial goods: An systems: A network interaction approach. John approach compared with Wiley & Sons: Chichester. the transaction cost * Turnbull, Peter W. – Valla, approach. International Jean-Paul (eds) (1986) 1987 Studies of Management Strategies for international, and Organization, 17(1): industrial marketing. 34–48. Croom Helm: Beckenham.

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* Johanson, Jan – Mattsson, Lars-Gunnar (1988) Interna- tionalisation in industrial systems: A network approach. In: Strategies in global competition, ed. by Hood Neil – Vahlne, Jan-Erik, 468–486. Croom Helm: London.

Contingency theory of the Contingency theory William G. Egelhoff * Egelhoff, William G. (1988) * Chandler, Alfred D. (1962) multinational enterprise Organizing the multinational Strategy and structure: enterprise: An information Chapters in the history of processing view. Ballinger industrial enterprise. MIT Publishing Company: Press: Cambridge, MA. Cambridge, MA. * Stopford, John M. – Wells, Louis T. (1972) Managing the multinational enterprise: Organization of the firm and ownership of subsidiaries. Basic Books: New York.

1988 Nitin Nohria & Sumantra * Nohria, Nitin – Ghoshal, N/A Ghoshal Sumantra (1997) The diﬀerentiated network: Organizing multinational corporations for value creation. Jossey-Bass Publishers: San Francis- co, CA.

Evolutionary theory of the Organizational capability John Cantwell * Cantwell, John (1989) N/A multinational enterprise theory Technological innovation and 1989 multinational corporations. Blackwell: Oxford. Year Key concept Underlying theoretical Main contributing Main publication(s) Main inspiring author(s) construct author(s) and publication(s) * Kogut Bruce – Zander, Udo * Teece, David J. (1977) (1992) Knowledge of the firm, Technology transfer by combinative capabilities, and multinational firms: the the replication of technology. resource costs of transferring Organization Science, 3: technological know-how. 383–397. Economic Journal , 87: * Kogut Bruce – Zander, Udo 242–261. (1993) Knowledge of the firm * Nelson, Richard R. – Winter, and the evolutionary theory Sidney G. (1982) An evolutio- of the multinational corpora- nary theory of economic tion. Journal of International change. Harvard University Business Studies, 24: Press: Cambridge, MA. 625-645.

Institutionalization theory Institutionalization theory Tatiana Kostova & Srilata * Kostova, Tatiana – Zaheer, N/A and the multinational Zaheer Srilata (1999) Organizational enterprise legitimacy under conditions of complexity: The case of the multinational enterprise. Academy of Management Review, 24(1): 64-81.

Timothy P. Blumentritt & * Blumentritt, Timothy P. and N/A Douglas Nigh Nigh, Douglas (2002) The integration of subsidiary 1999 political activities in multinational corporations. Journal of International Business Studies, 33(1): 57–78.

Lars Engwall * Engwall, Lars (2006) Global N/A enterprise in the ﬁelds of governance. In: Transnational governance: Institutional dynamics of regulation, ed by Djelic, Marie-Laure – Sahlin- Andersson, Kerstin, 161- 179. Cambridge University Press:

Cambridge, MA.

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