Capability and Multinational Enterprises (MNEs)

Academic approaches to the activities of the MNE have been dominated by the internalization theories developed in the field of international business (IB), including the envelope approach known as the eclectic paradigm. These theories are helpful but have several shortcomings, including an emphasis on the cost of investment decisions rather than on the opportunities they can create, a limited focus on managerial decision-making, and no model of the creation and maintenance of firm-level advantage. These problems can be addressed by a capability-based approach, such as the dynamic capabilities framework.