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Managing the Internalisation Process

Author

Listed:
  • Bent Petersen

    (Copenhagen Business School)

  • Lawrence S. Welch

    (University of Melbourne)

  • Gabriel R. G. Benito

    (BI Norwegian School of Management)

Abstract

Drawing on insights from managerially-oriented literature, this article explores the role of management in situations where the market transaction costs of using local, independent operators are negligible at market entry, but grow over time. A key question pertaining to this situation is: What management instruments may ensure persistent concurrence between changing pressure for internalisation in a foreign market and the effectuated internalisation of a MNE in that market? The article demonstrates the operating cost saving potential of putting in place options for gradual internalisation. Practical examples of such options are outlined. It is emphasized that gradual internalisation not only pertains to appropriation of local operators' financial assets, but also to their non-financial assets in relation to user rights, customer relations, and value added activities.

Suggested Citation

  • Bent Petersen & Lawrence S. Welch & Gabriel R. G. Benito, 2010. "Managing the Internalisation Process," Management International Review, Springer, vol. 50(2), pages 137-154, April.
    • Handle: RePEc:spr:manint:v:50:y:2010:i:2:d:10.1007_s11575-010-0031-6
    DOI: 10.1007/s11575-010-0031-6
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    Cited by:

    1. Jensen, Peter D. Ørberg & Larsen, Marcus M. & Pedersen, Torben, 2013. "The organizational design of offshoring: Taking stock and moving forward," Journal of International Management, Elsevier, vol. 19(4), pages 315-323.
    2. Fu-Sheng Tsai & Chin-Chiung Kuo & Julia L. Lin, 2020. "Knowledge Heterogenization of the Franchising Literature Applying Transaction Cost Economics," Economies, MDPI, vol. 8(4), pages 1-27, November.
    3. Cher-Hung Tseng, 2015. "Determinants of MNC’s Knowledge Inflows to Subsidiaries: A Perspective on Internalization Advantages," Management International Review, Springer, vol. 55(1), pages 119-150, February.
    4. Gabriel R. G. Benito & Bent Petersen & Lawrence S. Welch, 2011. "Mode Combinations and International Operations," Management International Review, Springer, vol. 51(6), pages 803-820, December.
    5. Griffiths, Kathleen & Kopanidis, Foula & Steel, Marion, 2018. "Investigating the value of a peer-to-peer mentoring experience," Australasian marketing journal, Elsevier, vol. 26(2), pages 92-98.
    6. Gabriel R G Benito & Bent Petersen & Lawrence S Welch, 2019. "The global value chain and internalization theory," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1414-1423, October.
    7. Putzhammer, Moritz & Puck, Jonas & Lindner, Thomas, 2020. "Changes in foreign operation modes: A review and research agenda," International Business Review, Elsevier, vol. 29(1).

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