Searching for a dynamic theory of the multinational enterprise: A transaction cost model
Article first published online: 16 FEB 2007
Copyright © 1988 John Wiley & Sons, Ltd.
Strategic Management Journal
Special Issue: Strategy Content Research
Volume 9, Issue S1, pages 93–104, Summer 1988
How to Cite
Hill, C. W. L. and Kim, W. C. (1988), Searching for a dynamic theory of the multinational enterprise: A transaction cost model. Strat. Mgmt. J., 9: 93–104. doi: 10.1002/smj.4250090710
- Issue published online: 16 FEB 2007
- Article first published online: 16 FEB 2007
This paper constructs a transaction cost model that provides an explanation for the transition between two distinct governance modes for serving a foreign market; a wholly owned subsidiary and licensing. The paper initially outlines a single-period model of the factors that influence a firm's choice of governance mode. The model is then extended, first to incorporate a temporal perspective and then a dynamic perspective. The completed model identifies organizational and environmental contingencies that shape dynamic multi-period decision-making for the choice of governance mode.