Chapter 3 - Overview of the Spectrum of Theoretical Approaches Discussed in the Lecture Flashcards
Theoretical Approaches
Exportorientierte Internationalisierung
- Theory of absolute cost advantage
- Theory of comparative cost advantage
- Factor Proportion Theory
- Theory of country size
- New Trade Theory
Theoretical Approaches
Investing abroad
- International product life cycle theory
- Learning-oriented Internationalization Theory
- Theory of monopolistic advantage
- Theory of oligopolistic reaction
- Internationalization Theory
- Eclectic Paradigm
- Behavioral Internationalization Theory
Theoretical Approaches
Multinational firms
- GAINS approach
- Theory of Operational flexibility
Theory of Absolute Cost Advantage (Adam Smith 1776)
Research Question:
- Why is there international trade between countries (level of analysis = countries)?
Basic Assumption:
- different countries can produce some kinds of goods/services more efficiently than others
Central statement:
- Countries should concentrate their production on those goods/services where they have such cost advantages
-> Since the citizens of the countries need/want to consume the whole variety of goods/services, international trade is necessary
Theory of comparative cost advantage (David Ricardo 1817)
Research question:
- What happens when one country has cost advantages in the production of both goods?
- theory rests and extends the theory of absolute cost advantage
- even in this case there are good reasons for international trade
Argument:
- a country will gain if it concentrates its resources on the production of those goods where it has relative cost advantage
Factor proportion theory (Hekscher/Oblin 1940s)
Starting point:
- the theories of Smith and Ricardo did not work out which goods are produced by a specific country
Level of analysis:
- countries
Basic assumption:
- Differences in country endowments of labor relative to their endowments of land/capital can explain differences in factor costs
Argument:
- Countries concentrate their production and export on those goods/services using mainly their abundant and therefore cheaper factors
Is this reasoning true? - in tendency, yes
Theory of country size
Starting point:
- the theories of Smith and Ricardo did not explain why countries are unequal with respect to their involvement in international trade than others
Level of analysis:
- countries
Theory of country size:
- the relative size of a country helps to understand why some countries are more involved in international trade than others
Theory of country size
Arguments
Smaller countries are more involved in international business activities
1) domestic market is quite restricted because they have few inhabitants -> therefore internationalize
2) availability of resources -> large countries have many resources
3) physical distance to the country border/foreign market is smaller than in bigger countries, so the transportation costs are not as high than in bigger countries
New trade theory (Paul Krugman 1980s)
Level of analysis:
- firm
Background:
- increasing importance of economies of scale and specialization
Example:
- aircraft industry
- those firms are most successful, which have the highest number of goods/services produced
- first mover advantages are very important; they are more important than factor endowments
International Product Life cycle theory (Hirsch/Vernon 1965/1966)
Goal of the theory:
- integrative explanation of trade and FDI (Existence of foreign subsidiaries)
Level of analysis:
- firms
Theory rests on the domestic product life cycle model
International Product Life cycle theory (Hirsch/Vernon 1965/1966)
Between which three types of countries does the theory distinguish?
- the country where innovation was conducted
- other industrialized countries
- economically less developed countries
Learning-oriented Internationalization Theory (Uppsala-Model)
Goal of the theory
to explain sequence of international activities with respect
1) to market entry forms and
2) to target countries
Learning-oriented Internationalization Theory (Uppsala-Model) (Johanson und Vahlne)
Key facts
Assumption:
- managers that are responsible for international business decisions are risk-averse
- thus, internationalizing companies tend to prefer market entry forms and target countries associated with little risk
- Internationalization is an incremental process resting on learning processes
- internationalization-specific learning is an experiential learning
Learning-oriented Internationalization Theory (Uppsala-Model)
Establishment chain
- zeitliches Muster im Hinblick auf die gewählten Markteintritts- und Marktbearbeitungsformen
- idealtypischer Verlauf
Stufe 1:
- keine Internationalisierungsaktivitäten
- Exporte höchstens sporadisch
Stufe 2:
- regelmäßige Exportaktivitäten, meist mithilfe von unabhängigen Handelsvertretern bzw. Agenten
Stufe 3:
- Vertriebsgesellschaften im Ausland
Stufe 4:
- Produktions(gesellschaften) im Ausland
-> dieses Internationalisierungmuster gilt prinzipiell für jeden Zielmarkt, d.h. für jeden Ländermarkt, den die International tätige Unternehmung bearbeitet
Learning-oriented Internationalization Theory (Uppsala-Model)
Psychic distance chain
- spricht die Frage an, wo sich Unternehmen international betätigen -> Reihenfolge
- Unternehmen wagen sich zunächst nur in vertraute, psychisch nahe Ländermärkte, bevor sie sich dann zunehmend vom Heimatmarkt in weniger vertraute, psychisch weiter entfernte Ländermärkte vorantasten
- Internationalisierung erfolgt also konzentrisch vom Heimatmarkt aus
Learning-oriented Internationalization Theory (Uppsala-Model)
Was versteht man unter psychischer Distanz?
- Psychische Distanz = Problem, dass zwischen verschiedenen Ländermärkten Unterschiede existieren, die den Informationsfluss zwischen der Unternehmung und den Märkten verhindern
- weiter gefasst: “factors preventing or disturbing firms’ learning about and understanding of a foreign environment
- Faktoren, die die psychische Distanz bestimmen: Unterschiede in Kultur, Sprache, Ausbildung, Managementverhalten und industrieller Entwicklung
Learning-oriented Internationalization Theory (Uppsala-Model)
Theorie
- Internationalisierung ist ein Prozess, bei dem Unternehmen ihre Internationalität graduell bzw. inkrementell und nicht sprunghaft bzw. revolutionär verändern
- betrifft sowohl Establishment Chain als auch Psychisch Distance Chain
Learning-oriented Internationalization Theory (Uppsala-Model)
Internationalisierungsmodell (Schritte)
- differenziert zwischen statischen und dynamischen Elementen
- Statisch: Market commitment und market knowledge
- dynamisch: market entry/commitment decisions, current activities
- Unternehmen verändern permanent die statischen Aspekte durch ihre Entscheidungen und Aktivitäten
- das Zusammenspiel von statischen und dynamischen Aspekten bestimmen das “Wie?” der Internationalisierung
- jeder Internationalisierungsschritt erhöht das Commitment und Market Knowledge
- dies kann wiederum neue Internationalisierungsschritte auslösen
- ständige Höherentwicklung durch organisationales Lernen
Learning-oriented Internationalization Theory (Uppsala-Model)
Kritik
- keine explizite Größenordnung von Unternehmen genannt
- Subjektivität als Entscheidungsgrundlage
- Wissen über andere muss nicht immer selbst erlangt werden
- Prozess dauert sehr lange
