The Challenge of International Business
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The Challenge of International Business Peter J. Buckley www.ebook3000.com The Challenge of International Business Also by Peter J. Buckley CANADA–UK BILATERAL TRADE AND INVESTMENT RELATIONS (with Christopher L. Paes and Kate Prescott) THE CHANGING GLOBAL CONTEXT OF INTERNATIONAL BUSINESS FOREIGN DIRECT INVESTMENT AND MULTINATIONAL ENTERPRISES INTERNATIONAL STRATEGIC MANAGEMENT AND GOVERNMENT POLICY THE FUTURE OF MULTINATIONAL ENTERPRISE (with Mark Casson) INTERNATIONAL TECHNOLOGY TRANSFER BY SMALL AND MEDIUM-SIZED ENTERPRISES (co-edited with Jaime Campos and Eduardo White) MULTINATIONAL ENTERPRISES IN LESS DEVELOPED COUNTRIES (co-edited with Jeremy Clegg) MULTINATIONAL FIRMS, COOPERATION AND COMPETITION IN THE WORLD ECONOMY THE STRATEGY AND ORGANIZATION OF INTERNATIONAL BUSINESS (co-edited with Fred Burton and Hafiz Mirza) STUDIES IN INTERNATIONAL BUSINESS INTERNATIONAL BUSINESS: Economics and Anthropology, Theory and Method www.ebook3000.com The Challenge of International Business Peter J. Buckley Centre for International Business University of Leeds UK ' Peter J. Buckley 2004 Foreword ' Steve Kobrin 2004 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2004 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillanâ is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 1403913064 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress cataloging-in-Publication Data Buckley, Peter J., 1949 The challenge of international business / Peter J. Buckley. p. cm. Includes bibliographical references and index. ISBN 1403913064 (cloth) 1. International business enterprisesManagement. 2. Knowledge management. 3. Joint ventures. 4. Investments, Foreign. 5. Transfer pricing. 6. Competition, International. 7. International business enterprisesDeveloping countries. I. Title HD62.4.B828 2004 6580.049dc22 2004046494 1098765432 1 13 12 11 10 09 08 07 06 05 04 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne www.ebook3000.com To current and future members of the Institute for Research on Contemporary China (IRCC), University of Leeds This page intentionally left blank www.ebook3000.com Contents Foreword by Stephen J. Kobrin ix Acknowledgements xi Notes on the Contributors xii 1 Introduction 1 Part I The Challenge 2 Is the International Business Research Agenda Running out of Steam? 7 Part II The Response 3 Strategic Complexity in International Business (with Mark Casson)19 4 Internationalization – Real Options, Knowledge Management and the Uppsala Approach (with Mark Casson and Mohammed Azzim Gulamhussen)54 5 Globalization and the End of Competition: a Critical Review of Rent-seeking Multinationals (with Pervez N. Ghauri)83 6 Trust in International Joint Venture Relationships (with Margreet F. Boersma and Pervez N. Ghauri) 101 7 The Challenges of the New Economy for Multinational Firms: Lessons for South-East Asia 124 Part III Knowledge Management in Multinational Firms 8 Process and Structure in Knowledge Management Practices of British and US Multinational Enterprises (with Martin J. Carter) 145 9 Governing Knowledge Sharing in Multinational Enterprises (with Martin J. Carter) 167 vii viii Contents Part IV Empirics 10 Evolution of FDI in the United States in the Context of Trade Liberalization and Regionalization (with Jeremy Clegg, Nicolas Forsans and Kevin T. Reilly) 189 11 The Impact of Inward FDI on the Performance of Chinese Manufacturing Firms (with Jeremy Clegg and Chengqi Wang) 198 12 FDI, Regional Differences and Economic Growth: Panel Data Evidence from China (with Jeremy Clegg, Chengqi Wang and Adam R. Cross) 220 13 Incentives to Transfer Profits: a Japanese Perspective (with Jane Frecknall Hughes) 242 14 A Survey-based Investigation of the Determinants of FDI in Portugal (with Francisco B. Castro) 254 Index 290 www.ebook3000.com Foreword In some respects international business is a relatively new field of scholarly research. Many of those who were ‘present at the creation’ such as John Dunning, Stefan Roebock and Jean Boddewyn are still active participants in academic meetings. On the other hand it has been over 40 years since two events occurred in 1960 which can be taken as marking the separation of international business from international economics: the completion of Stephen Hymer’s seminal dissertation arguing that foreign direct investment (FDI) could not be explained as an international capital flow, and the first use of the term ‘multinational corporation’ by David Lillienthal at a con- ference at what is now Carnegie Mellon University. One can only assume that the arguments about whether or not inter- national business was a separate discipline started immediately! That some- what hoary question aside, there is no question that the first few decades of international business research were dynamic, productive and exciting. Great strides were made in explaining FDI phenomenologically, developing systematic and empirically based analyses of the strategy and structure of multinational firms, understanding the motives for and sequence of inter- national expansion, entry strategy and the management of joint ventures and alliances. I suspect that many of us in the field feel that the flow of new knowledge has slowed considerably in the last decade. While international business researchers continue to be productive and there have been a large number of interesting new papers and books published, it is hard to think of many major breakthroughs since the last 1980s and early 1990s. To some extent, this is a natural consequence of the maturity of any academic discipline. As a discipline ages the initial burst of new knowledge is replaced by deeper, more sophisticated and more empirically rigorous studies of a necessarily more limited scope. On the other hand, it may reflect the approaching exhaustion of the current paradigm (or paradigms): it may result from diminishing returns from current approaches to scholarship. Peter Buckley hurls such a challenge at the outset of this volume, suggest- ing that ‘the international business research agenda is running out of steam after a period of vibrancy’. Buckley argues that at this point international business lacks a ‘big research question’, an important confrontation with empirical reality that the scholars in the field can deal with collaboratively. In the chapters that follow Buckley and his co-authors and contributors suggest some directions for international business research, some ‘big prob- lems’ that will re-energize and reinvigorate the field and they provide some examples of methodologies and approaches to problems that will certainly ix x Foreword be useful to other scholars. It would be unusual if every reader of this volume agreed with the challenge that Buckley poses, or indeed agrees that inter- national business research is ‘running out of steam’. That be as it may, every reader will find much of interest in this book: the problems posed; argu- ments and theories suggested; and the methodologies explored will serve to help stimulate a wide variety of research programmes. Peter Buckley has never been known for avoiding controversy. In the chap- ters that follow he asks a much needed question and attempts to provide, at least an outline of, an answer. The challenge he puts forth should be taken up and considered seriously by all international business academics. STEPHEN J. KOBRIN Philadelphia www.ebook3000.com Acknowledgements Chapter 2 first appeared in Journal of International Business Studies, vol. 33, no. 2, 2002, pp. 365–73. Chapter 3: Alan M. Rugman and Thomas L. Brewer (eds) The Oxford Handbook of International Business, Oxford University Press, 2003, pp. 88–126. Chapters 4 and 5: Virpi Havila, Mats Forsgren and Hakan Hakansson (eds) Critical Perspectives on Internationalisation, Elsevier Science, Oxford, 2002, pp. 229–61 and 7–28. Chapter 6: Journal of Business Research, xxxx. Chapter 7: N. Freeman and F. Bartels (eds) The Future of Foreign Investment in Southeast Asia, Routledge Curzon, London, 2004. Chapter 8: Journal of International Management, vol. 8, 2002, pp. 29–48. Chapter 9: Management International Review, vol. 43, Special issue 3, 2003, pp. 7–25. Chapter 10: Journal of Business Research, vol. 56, no. 10, 2003, pp. 853–57. Chapter 11: Journal of International Business Studies, vol. 33, no. 4, 2002, pp. 637–55. Chapter 12: Transnational