Summary: International Strategy

Read the summary and the most important questions on International Strategy

• 1 Week 1

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• What does Non-ergodic world of continuous change means regarding institutions?

  Non-ergotic world means that the world changes and things will be different in X years from now.

• What is the result of non-ergodic uncertainty?

  non-ergodic uncertainty has placed more emphasis on the development of new institutions that help better manage or reduce uncertainty in the course of economic development. Experimentation is key (Institutional entrepreneurship). MNEs have responded to this higher uncertainty shifting to more open business network structures (MNEs as crucial actors of Institutional innovation)

• Why are MNEs confronted with institutional tensions more frequently than are firms operating in a single country?

  Because they have to deal with more institutions than firms operating in a single country

• IB activities can be asset/competence-exploiting or –creating. What is the difference between the two?

  With the first it is the organizational coherence and commonality that matters, with the second it is innovation, entrepreneurship and variety that play a role

• What is the critique of Powell and DiMaggio’s to economists in their institutions article?

  Economists only examine the comparative statics of equilibrium positions, profit maximization is not the real objective of firms. Firms are non-optimizing organizations, whose path of evolution required them to learn through trial and error of experimental search and exploration. Firms are on a continual process of search for satisfactory but sustainable profits

• How do MNE's engage with institutions?

  1) Institutional avoidance. They take the institutional environment as a given (Exit in case of non-match)
  2) Institutional adaptation. In this case the environment is also exogenous. MNE adjusts its own structure and policies to better fit the environment
  3) Institutional co-evolution. Environment is partly endogenous. Introduction of new organizational routines and best practices
  
  Role of path dependency, environmental selection and managerial intentionality

• How do MNE's and institutions co-evolve?

  Legal enforcements of contracts, patent systems fostering innovation, institutions against corruption

• Why is co-evolution of MNE's and institutions important?

  1) it creates more flexibility for MNE's, which is essential for experimentation to take place
  2) it creates more certainty in an uncertain world, so MNE's know better what to do

• What is the article of Foss and Pedersen (week 1) all about?

  “Transition of the dominant conceptual model of the MNE from the market failure approach of internalization theory and TCE to the market imperfections approach of capabilities or knowledge-based theories of the firm”. 
  MNEs as knowledge-sharing network whose existence can be understood in terms of its greater ability to transfer, create, integrate and deploy certain kinds of knowledge more efficiently than markets. “It is to the lasting credit of the theory of the MNC that it recognized knowledge as a key factor shaping economic organization long before the mainstream economics of organization did this”

• What are four different forms of arbitrage?

  1) Knowledge arbitrage
  2) Labour arbitrage
  3) Tax arbitrage
  4) Capital arbitrage