Theories of international production: a critical perspective

Abstract

Purpose The purpose of this paper is to analyse the role that the nation‐state plays in influencing the behaviour of the transnational companies (TNCs) and how it affects one's view of TNCs as efficiency‐ versus strategy‐driven institutions. Design/methodology/approach The paper starts with a brief historical analysis of the main theories of international production and the TNCs, to which it then relates the role of the nation‐state and of strategic approaches. Findings The characteristics of the nation‐states that affect the behaviour of TNCs are linked to their regulatory regimes regarding fiscal, currency and social security regulations. These create opportunities for advantages of operating across frontiers and thus for specific strategic behaviour towards labour and governments. Research limitations/implications The theoretical approach presented will need to be supported by empirical findings. Practical implications There are policy implications specifically related to the fact that multinationalityper segives advantages and that actors other than the TNCs may have to move towards achieving a multinational organization. Originality/value The paper questions the international character of most current theories of the TNC, arguing about the necessity to put the nation‐states with their different characteristics at the heart of the explanations of TNCs' activities and suggests a strategic rather than efficiency approach to theories of the TNC.

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