The Uppsala model on evolution of the multinational business enterprise – from internalization to coordination of networks

TLDR

The paper proposes an alternative to the eclectic paradigm, the dominant framework for studying multinational enterprises and foreign direct investment. The study aims to present a realistic, behaviorally grounded model of the evolution of the multinational business enterprise. The model shifts focus from production structure to dynamic business relations and entrepreneurship, drawing on the Uppsala model, dynamic capabilities, entrepreneurship research, and uncertainty management, and is intended for micro‑level studies. The model’s realistic assumptions make it useful for explaining MBE strategy and management dynamics, and the authors suggest longitudinal empirical studies to further validate it, highlighting its distinctiveness from existing theory.

Abstract

Purpose – This paper seeks to offer a model on the evolution of the multinational business enterprise (MBE). It is meant to be an alternative to the eclectic paradigm, the preeminent theoretical tool applied in studies of the multinational enterprise (MNE) and foreign direct investment. The label MBE aims at moving focus from structure of production to change processes in business relations and entrepreneurship. Design/methodology/approach – While the eclectic paradigm is grounded in neo-classical economics meant primarily to be applied in studies of macroeconomic interest and is based on assumptions not applicable in studies of individual firms, the model of the MBE is meant to be used in studies at the micro-level. It is rooted in assumptions consistent with behavioural theory consequently being more realistic. The model is based on the Uppsala model with input from studies on dynamic capabilities, entrepreneurship research and research on management under uncertainty. Findings – The realistic assumptions of the model imply that it is relevant for understanding the dynamics of strategy and management of the MBE. Research limitations/implications – As the model aims at enriching our understanding of the dynamics of the MBE the paper recommends empirical longitudinal studies of firms. Originality/value – Realistic and relevant assumptions imply that the model differs in critical respects from received theory in international business.