Is Competitive Advantage a Necessary Condition for the Emergence of the Multinational Enterprise?

Authors

  • Niron Hashai,

    Corresponding author
    1. School of Business Administration, The Hebrew University of Jerusalem, Jersusalem, Israel
    • Correspondence to: Niron Hashai, School of Business Administration, The Hebrew University of Jerusalem, Mt. Scopus, Jerusalem, 91905, Israel. E-mail: nironh@huji.ac.il

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  • Peter J. Buckley

    1. Centre for International Business, Leeds University Business School, The University of Leeds, Leeds, United Kingdom
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Abstract

This article challenges the view that competitive advantage is a necessary condition for the emergence of the multinational enterprise. It formally derives the conditions under which multinational enterprises may emerge without possessing a competitive advantage vis-a-vis their rivals. This counterintuitive argument is based on three insights: (1) the ability of a larger number of disadvantaged home country entrepreneurs to enroll workers in the host country more efficiently than a smaller number of advantaged host country entrepreneurs; (2) asymmetric liability of foreignness for home and host country entrepreneurs; and (3) the ability of location and internalization advantages to substitute for ownership advantage.

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