A Better Approach to Understanding Foreign Direct Investment and Multinational Corporations

In addition to introducing the main integrating themes of this book, this chapter explains how they are distinct from those studied in the usual approach to analyzing multinational corporations (MNCs) and foreign direct investment (FDI), and why they can help to provide a more accurate, better balanced understanding of these increasingly important phenomena in the global economy. The core thesis is that a reconciliation of the two diametrically different assessments of MNCs and FDI requires that MNCs be recognized as heterogeneous entities and FDI as a heterogeneous process. The presence of...

In addition to introducing the main integrating themes of this book, this chapter explains how they are distinct from those studied in the usual approach to analyzing multinational corporations (MNCs) and foreign direct investment (FDI), and why they can help to provide a more accurate, better balanced understanding of these increasingly important phenomena in the global economy. The core thesis is that a reconciliation of the two diametrically different assessments of MNCs and FDI requires that MNCs be recognized as heterogeneous entities and FDI as a heterogeneous process. The presence of hundreds of thousands of foreign subsidiaries inevitably mean an infinite variety of effects and cost-benefit ratios. Disaggregation becomes an essential analytic tool in the absence of homogeneity. Most generalizations are inaccurate or distorted. Appreciation for the dominance of perceptions in a subject area with few absolute truths is presented as an essential analytic approach. Another basic thesis argues that these international business phenomena are more effects, than causes of change. Finally, the argument is made that even accurate evaluations of MNCs and FDI tend to have a short life-span because they are dynamic and constantly changing, not static, phenomena.