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Information to Users INFORMATION TO USERS This manuscript has been reproduced from the microfilm master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in typewriter face, while others may be from any type of computer printer. The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleedthrough, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand corner and continuing from left to right in equal sections with small overlaps. Each original is also photographed in one exposure and is included in reduced form at the back of the book. Photographs included in the original manuscript have been reproduced xerographically in this copy. Higher quality 6" x 9" black and white photographic prints are available for any photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. University Microfilms International A Bell & Howell Information Company 300 North Zeeb Road. Ann Arbor, Ml 48106-1346 USA 313/761-4700 800/521-0600 Order Number 9227231 The effect of environmental factors on the multinational enterprise’s use of external markets Blaine, Michael James, Ph.D. The Ohio State University, 1992 Copyright ©1992 by Blaine, Michael James. All rights reserved. UMI 300 N. ZeebRd. Ann Arbor, MI 48106 THE EFFECT OF ENVIRONMENTAL FACTORS ON THE MULTINATIONAL ENTERPRISE'S USE OF EXTERNAL MARKETS DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of the Ohio State University By Michael Jam es Blaine, B.S., M.A., M.B.A., M.F.A. The Ohio State University 1992 Dissertation Committee: Approved by Riad Ajami Richard Baldwin Sven Lundstedt Administration, Graduate Program Copyright by Michael James Blaine 1992 ACKNOWLEDGEMENTS I would like to express my sincere gratitude to several individuals, without whose assistance this project would have been infinitely more difficult. First and foremost, I would like to thank Dr. Riad Ajami and Dr. Sven Lundstedt for their support and guidance throughout all phases of this research. The opportunity to work with professors of their stature has made the writing of this dissertation a far more rewarding experience. In addition, I would like to thank Dr. Richard Baldwin for serving on my advisory committee. Thanks also goes to Raymond Mataloni Jr., of the U.S. Department of Commerce, for his assistance in accessing the appropriate data on the operations of U.S. MNEs; Dr. Edward Roche, of Seton Hall University, for his assistance in developing the indicator used to evaluate various Political Systems; and Stephen Preece, a fellow doctoral student, for his comments on an earlier draft of this dissertation. Last but not least, I would like to thank Molly Dodd, Grade Mansion, Mrs. Puff, and Brenda Walsh for providing a welcome diversion from the many problems associated with the completion of this project. VITA Sept. 13,1952................................................................. Born - Columbus, Ohio 1974 ..................................................................................B.S.; Antioch College; Yellow Springs, Ohio 1978 ................................................................................M.F.A.; Florida State University; Tallahassee, Florida 1986 ......................................................... ...................... M.B.A.; New York University; New York, New York 1989-Present ......................................... ........................Teaching Assistant; Ohio State University; Columbus, Ohio PUBLICATIONS Blaine, M.; "Markets Reconsidered: The Role of Free Market Structures in Economic Development”; Proceedings: 27th Annual Meeting. Midwest Business Administration Association: MBAA; 1991 Blaine, M.; “Changing Dynamics in the Global Economy: The Effects of European Integration on the Pacific Rim"; Proceedings: International Symposium on Pacific Asian Business: University of Hawaii; 1991 Blaine, M.; “A Development Model for the Poorest Nations of Southeast Asia”; Proceedings: Business in Southeast Asia. A Teaching and Research Conference: Ann Arbor; University of Michigan; 1990 Ajami, R., & Blaine, M.; “America’s Ideological Quagmire in the Middle East"; Ohio State University College of Business, Working Paper Series; WPS 90-94; 1990 Ajami, R., & Blaine, M.; “Beyond Ideology: Economic Realism in the Emerging Global Economy"; Ohio State University College of Business, Working Papers Series; WPS 90-76; 1990 iv FIELDS OF STUDY Major Field: Business Administration Specialization: International Business Strategic Management Public Policy v TABLE OF CONTENTS ACKNOWLEDGEMENTS..................................................................................... iii VITA......................................................................................................................... iv LIST OF TABLES ................................................................................................. x LIST OF FIGURES.................................................................................................. xi LIST OF ABBREVIATIONS.................................................................................... xii CHAPTER............................................... PAGE I. INTRODUCTION..................................................................................... 1 Overview.............................................................................................. 1 Background ......................................................................................... 3 I. Theory of the Firm................................................................ 7 II. Organizational Structure .................................................... 5 III. The Organization and the Environment......................... 9 IV. The Multinational Enterprise............................................. 11 V. MNE Structure ...................................................................... 14 VI. The MNE and the Environment......................................... 15 VII. The Changing International Environment...................... 17 VIII. Organizational Responses................................................. 19 IX. "The Coming of the New Organization”........................... 22 Statement of the Problem.................................................................. 24 Objectives ............................................................................................ 25 Scope of the R esearch....................................................................... 26 Methodology.......................................................................................... 27 Research Hypotheses.......................................................................... 29 I. Introduction ....................................................................29 II. Independent Variables ...........................................................29 III. Dependent Variables ........................................................... 31 IV. Research Hypotheses........................................................... 31 Limitations of the Study...................................................................... 32 Contribution of the Study ................................................................... 35 vi Organization of the Dissertation...................................................... 36 N otes................................................................................................... 37 II. REVIEW OF LITERATURE.................................................................... 40 Introduction.......................................................................................... 40 MNE Theory.........................................................................................41 I. Introduction........................................................................... 41 II. The Hymer-Kindleberger Tradition ...................................42 III. The Product Life Cycle Hypotheses................................ 45 IV. Internalization Theory......................................................... 47 V. Diversification and Internationalization........................... 50 VI. Location Theory................................................................... 51 VII. General Theories of the MNE............................................ 52 VIII. Transaction Cost Analysis................................................. 57 IX. Economies of Scale............................................................ 60 X. Another Classification Scheme........................................ 62 XI. Conclusions ...............................................................: 63 Organizational Theory........................................................................ 67 I. Introduction ............................................................ 67 II. The Stopford and Wells Model......................................... 70 III. Other Strategy and Structure Studies ............................. 75 IV. Contingency
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