Capability-Based Theories of Multinational Enterprise Growth

In this chapter we argue that traditional approaches to modeling the growth of the multinational enterprise (MNE) that focus on costs and efficiencies are too narrow to adequately and comprehensively address the foundations of MNE growth trajectories. Today’s global realities and the changing view of the MNE require a more focused and explicit capability-based perspective. In particular, we posit that contemporary theories of the MNE require frameworks and explanations that should simultaneously account for the uncertainties that firms face in their external environment and the complexities of often competing internal, organizational alternatives. To develop our reasoning in support of capability-based thinking, we discuss the changing nature on the international business (IB) landscape, the evolving views on the nature of the MNE, and present the core building blocks of capability-based thinking in managing MNE growth. We conclude the chapter by offering some thoughts on how capability-based thinking could be applied in future scholarly efforts.