GSM Lecture 2

Management > Global Strategic Management > Comparative advantage > Hymer > Vernon > Product cycle > Buckley and Casson

Buckley and Casson

Buckley and Casson (1976) identified a number of major concepts:

• Firms maximise profit in imperfect markets
• When markets in intermediate products (OAs) are imperfect, there is an incentive to bypass them, creating internal markets (common ownership, control - see Understanding the Global Firm, Internalisation of OAs, lecture 7)
• Internalisation of markets across boundaries generates MNEs
• Incentives to internalise depends on the interplay of industry-specific, region-specific, nation-specific and firm-specific factors
• When future markets are lacking there is a strong incentive for firms to create their own internal futures markets by controlling the interdependent activities

Internalisation

Eclectic paradigm

Ownership advantages

Motives for FDI

OA, LA and I

Problems?