University of Amsterdam
Master Business Administration
Summary theories of international management
2020-2021
,Table of contents
Exam tips ................................................................................................................................... 3
Week 1, lecture 1, theme 1: IB Theoretical foundations ........................................................... 5
Week 1, lecture 2, theme 1: IB Theoretical foundations ........................................................... 9
Week 2, lecture 1, theme 2: IB Theoretical foundations regional and global integration
process .................................................................................................................................... 21
Week 2, lecture 2, theme 2 IB Theoretical foundations regional and global integration
process .................................................................................................................................... 25
Week 3, lecture 1, theme 3: Entry modes of FDIs ................................................................... 32
Week 3, lecture 2, theme 3: Entry modes of FDIs ................................................................... 36
Week 5, Lecture 1, Theme 4: Home-Host country distance .................................................... 42
Week 5, Lecture 2, Theme 4: Home-Host country distance and the concept of distance ...... 51
Week 6, lecture 1, theme 5: New and emerging types of MNEs ............................................. 58
Week 6, lecture 2, theme 5: New and emerging types of MNEs ............................................. 69
Summary of Theories of International Management .............................................................. 76
,Exam tips
- Knowing the essentials of all articles
o what are the core theoretical perspectives?
- Being able to identify relationships between theories
o similarities, differences, developments in thinking, etc.
- Giving clear, precise, and readable answers
- Read the questions carefully
- Think first (using the extra paper), then write
- Get to the point quickly; avoid long introductions
- Only write your answers in the answer spaces provided
- Manage your time well approx. 45 min per Q
Furthermore:
Do use illustrations to back up the story.
Know the core concepts of the articles.
Identify similarities and differences between the theories.
Previous exam Q:
Q1a: Following Luo & Tung (2007), explain & describe THREE motivations for springboard
international expansion by EMMNEs. (4 points)
- Luo & Tung (2007) describe 6 motivations for springboard international expansion by
EMNEs:
1. EM MNEs use international expansion as a springboard to compensate for
their competitive disadvantages. When investing in developed countries,
they seek sophisticated technology or advanced manufacturing know-how
by acquiring foreign companies or their subunits that possess such
proprietary technology.
2. EM MNEs use international expansion as a springboard to overcome their
latecomer disadvantage. Through some path-independent and proactive
steps, such as mergers and acquisitions and strategic asset-seeking from
advanced markets, 'springboard' moves allow EMMNEs to alleviate some
latecomer or newcomer deficiencies in areas such as consumer base,
brand recognition, and technological leadership.
3. EMMNEs use international expansion as a springboard to counter-attack
global rivals' major foothold in their home country market. To most
EMMNEs, their home country markets are still their primary territory of
operation.
4. EMMNEs use outward investment as a springboard to bypass stringent
trade barriers (e.g., quota restrictions, anti-dumping penalties, and special
tariff penalties).
5. EMMNEs use international expansion as a springboard to alleviate
domestic institutional constraints. Institutional voids (e.g., lack of legal
protection for IPR, poor enforcement of commercial laws, non-transparent
judicial and litigation systems, underdeveloped factor markets and
inefficient market intermediaries.
6. EMMNEs use international expansion as a springboard to secure
preferential treatment offered by emerging market governments
, Q1b: According to Oviatt & McDougall (2005), what are the Four elements for sustainable
INVs? Define and describe each element. (6 points)
1. Internalization of some transactions (naming 0.5, description 1 point)
Organizations form where market imperfections exist. When the TC of constructing &
executing a contract & monitoring the performance of the contracting parties are at
their lowest in an organization, its hierarchical authority will be the governance
mechanism chosen and the transaction is said to have been internalized within an
organization
2. Alternative governance structures (naming 0.5, description 1 point)
INVs commonly lack sufficient resources to control many assets through ownership.
Thus, INVs tend to internalize or own a smaller % of the resources essential to their
survival than od mature organizations.
3. Foreign location advantage (naming 0.5, description 1 point)
The location advantage element of the framework distinguishes international from
domestic organizations. Firms are international because they find advantage in
transferring some moveable resources across a national border to be combined with
an immobile or less mobile resource or opportunity. (description = 1).
4. Unique resources (naming 0.5, description 1 point)
To be a sustainable INV, its resources need to be unique. Therefore, it is essential for
INVs to limit the use of its knowledge by outsiders in many countries for it to have
commercial value. (description = 1)
Master Business Administration
Summary theories of international management
2020-2021
,Table of contents
Exam tips ................................................................................................................................... 3
Week 1, lecture 1, theme 1: IB Theoretical foundations ........................................................... 5
Week 1, lecture 2, theme 1: IB Theoretical foundations ........................................................... 9
Week 2, lecture 1, theme 2: IB Theoretical foundations regional and global integration
process .................................................................................................................................... 21
Week 2, lecture 2, theme 2 IB Theoretical foundations regional and global integration
process .................................................................................................................................... 25
Week 3, lecture 1, theme 3: Entry modes of FDIs ................................................................... 32
Week 3, lecture 2, theme 3: Entry modes of FDIs ................................................................... 36
Week 5, Lecture 1, Theme 4: Home-Host country distance .................................................... 42
Week 5, Lecture 2, Theme 4: Home-Host country distance and the concept of distance ...... 51
Week 6, lecture 1, theme 5: New and emerging types of MNEs ............................................. 58
Week 6, lecture 2, theme 5: New and emerging types of MNEs ............................................. 69
Summary of Theories of International Management .............................................................. 76
,Exam tips
- Knowing the essentials of all articles
o what are the core theoretical perspectives?
- Being able to identify relationships between theories
o similarities, differences, developments in thinking, etc.
- Giving clear, precise, and readable answers
- Read the questions carefully
- Think first (using the extra paper), then write
- Get to the point quickly; avoid long introductions
- Only write your answers in the answer spaces provided
- Manage your time well approx. 45 min per Q
Furthermore:
Do use illustrations to back up the story.
Know the core concepts of the articles.
Identify similarities and differences between the theories.
Previous exam Q:
Q1a: Following Luo & Tung (2007), explain & describe THREE motivations for springboard
international expansion by EMMNEs. (4 points)
- Luo & Tung (2007) describe 6 motivations for springboard international expansion by
EMNEs:
1. EM MNEs use international expansion as a springboard to compensate for
their competitive disadvantages. When investing in developed countries,
they seek sophisticated technology or advanced manufacturing know-how
by acquiring foreign companies or their subunits that possess such
proprietary technology.
2. EM MNEs use international expansion as a springboard to overcome their
latecomer disadvantage. Through some path-independent and proactive
steps, such as mergers and acquisitions and strategic asset-seeking from
advanced markets, 'springboard' moves allow EMMNEs to alleviate some
latecomer or newcomer deficiencies in areas such as consumer base,
brand recognition, and technological leadership.
3. EMMNEs use international expansion as a springboard to counter-attack
global rivals' major foothold in their home country market. To most
EMMNEs, their home country markets are still their primary territory of
operation.
4. EMMNEs use outward investment as a springboard to bypass stringent
trade barriers (e.g., quota restrictions, anti-dumping penalties, and special
tariff penalties).
5. EMMNEs use international expansion as a springboard to alleviate
domestic institutional constraints. Institutional voids (e.g., lack of legal
protection for IPR, poor enforcement of commercial laws, non-transparent
judicial and litigation systems, underdeveloped factor markets and
inefficient market intermediaries.
6. EMMNEs use international expansion as a springboard to secure
preferential treatment offered by emerging market governments
, Q1b: According to Oviatt & McDougall (2005), what are the Four elements for sustainable
INVs? Define and describe each element. (6 points)
1. Internalization of some transactions (naming 0.5, description 1 point)
Organizations form where market imperfections exist. When the TC of constructing &
executing a contract & monitoring the performance of the contracting parties are at
their lowest in an organization, its hierarchical authority will be the governance
mechanism chosen and the transaction is said to have been internalized within an
organization
2. Alternative governance structures (naming 0.5, description 1 point)
INVs commonly lack sufficient resources to control many assets through ownership.
Thus, INVs tend to internalize or own a smaller % of the resources essential to their
survival than od mature organizations.
3. Foreign location advantage (naming 0.5, description 1 point)
The location advantage element of the framework distinguishes international from
domestic organizations. Firms are international because they find advantage in
transferring some moveable resources across a national border to be combined with
an immobile or less mobile resource or opportunity. (description = 1).
4. Unique resources (naming 0.5, description 1 point)
To be a sustainable INV, its resources need to be unique. Therefore, it is essential for
INVs to limit the use of its knowledge by outsiders in many countries for it to have
commercial value. (description = 1)
