GSM Lecture 2

Management > Global Strategic Management > Comparative advantage > Hymer > Vernon

Vernon

For another study of Vernon, see Understanding the Global Firm, lecture 4)

Like Hymer, Vernon (1966) examined firm-level assumptions left out by neo-classical economists, emphasising marketing, entrepreneurs, trade barriers, international capital markets, and criticises both the Leontif paradox and H-O model.

Vernon remains with factor endowments theory, but acknowledges strategic factors which come from oligopolistic market structures.

He started with trade theory and micro-economics and keeps his analysis limited to US firms' behaviours. He found that countries have immobile resources and there is a propensity to trade which depends on the capacity to upgrade, which was the source of ownership advantages (OA) (See Understanding the Global Firm, Dunning's OA analysis, lecture 3). However, his examination remains at country level.