Capability and Multinational Enterprises (MNEs)

Abstract

Academic approaches to the activities of the MNE have been dominated by the internaliza-tion theories developed in the field of ▶ international business (IB), including the envelope approach known as the ▶ eclectic paradigm. These theories are helpful but have several shortcomings, including an emphasis on the cost of investment decisions rather than on the opportunities they can create, a limited focus on managerial decision-making, and no model of the creation and maintenance of firm-level advantage. These problems can be addressed by a capability-based approach, such as the dynamic capabilities framework.