The Dynamics of the MNE in a World of Transactions Costs: From Assets' Holding to Relational Contracts
12 Pages Posted: 19 Jan 2015
Date Written: January 17, 2015
The post WWII MNE came into being in response to market imperfections including the national state. The Dunning OLI model deals with three major imperfections; ownership advantage (O), national governments (I), and replacing markets by organizations (I). All three imperfections affect transactions costs. The main proposition of this study is that it is useful to discuss economic models to gain better understanding of MNEs and their development over time. The changes in MNEs from horizontal integration to vertical integration and the movement towards more flexible global structures like open platforms can be better understood as a series of responses to changes in transactions costs. Understanding the economic narrative of the MNE in the second half of the 20th century and the first decade of the 21st century helps to anticipate the changes in the future of the MNE.
Keywords: Organizational economics of the MNE, transactions costs economics
JEL Classification: D21, F23, L14
Suggested Citation: Suggested Citation