The incomplete nature of contracts governing international transactions limits the extent to which the production process can be fragmented across borders. In a dynamic, general-equilibrium Ricardian model of North-South trade, the incompleteness of international contracts is shown to lead to the emergence of product cycles. Because of contractual frictions, goods are initially manufactured in the North, where product development takes place. As the good matures and becomes more standardized, the manufacturing stage of production is shifted to the South to benefit from lower wages. Following the property-rights approach to the theory of the firm, the same force that creates product cycles, i.e., incomplete contracts, opens the door to a parallel analysis of the determinants of the mode of organization. The model gives rise to a new version of the product cycle in which manufacturing is shifted to the South first within firm boundaries, and only at a later stage to independent firms in the South. Relative to a world with only arm’s length transacting, allowing for intrafirm production transfer by multinational firmsisshown to accelerate the shift of production towards the South, while having an ambiguous effect on relative wages. The model delivers macroeconomic implications that complement the work of Krugman (1979), as well as microeconomic implications consistent with the findings of the empirical literature on the product cycle.

www.jibs.net Since the 1990s, Central and Eastern Europe (CEE) has provided unique societal quasi-experiments, which represent opportunities to test the applicability of existing theories in international business and management studies and to develop new ones. Specifically, three lines of theorising have been advanced: (1) organisational economics theories; (2) resource-based theories; and (3) institutional theories. For each of these theories, we discuss how they contribute to the understanding of key issues, such as entry strategies of foreign investors, restructuring strategies of local incumbents, and entry and growth strategies of entrepreneurs. On this basis, we assess how CEE research has influenced the overall trajectories of theory development. CEE research has in particular highlighted the importance of contextual influences such as institutions. Thus, scholars have aimed at incorporating institutions into theories (such as organisational economics theories and resource based theories) and advancing an institution-based view of business strategy as a complementary perspective. We outline how future research in CEE and other emerging economies may advance this research agenda further.

The capitalist and socialist societies of the 20 th century assigned firms different roles within their economic systems. Enterprises transforming from socialist to market economies thus face fundamental organizational restructuring. Many former state-owned firms in the transition economies of Central and Eastern Europe have failed at this task. These firms have pursued primarily defensive downsizing, rather than strategic restructuring, as a result of both internal and external constraints on restructuring strategies. Building on the organizational learning and resource-based theories, we analyze strategies available to management in privatized, former state-owned enterprises in transition economies to restructure their organization. Both internal forces promoting or inhibiting the restructuring process, and external constraints arising in the transition context are examined. A model and testable propositions are developed that explain post-privatization performance. Implications of our research point to the ways in which firms should manage and develop their resource base to transform to competitive enterprises.

This paper presents a model that complements the research stream of transaction cost economics with the dynamic capabilities approach. The paper shows that, even though technological alliances involving specific assets deployed in emerging industries are exposed to high transaction costs, they possess attributes that make them attractive. First, they facilitate the creation of tacit competencies, and second, they reduce the uncertainty arising from technological innovation and regulatory changes. The model is empirically tested in the hazardous waste management industry by using primary data collected through the use of questionnaires. The method links governance structure choices to managers' perceptions of the uncertainty surrounding the acquisition of technology

The current interest in the tacit aspects of knowledge has diverted attention from the economic significance of its converse, explicit or articulated knowledge, and, by implication, the importance of articulation—the process through which tacit skills and knowledge are made explicit—and codification—the process of rendering articulated knowledge in fixed, standardized and easily replicable form. In partial alignment with the literature on "distributed cognition" the article outlines a general model of articulation as a process involving the interplay of three elements: "theory," "codes," and "tools" in communities ranging in size from small groups to entire industries. The costs and benefits of articulation are discussed, drawing attention to how these may be affected by institutional and organizational design.

The growth of a global infrastructure has enabled the spatial dispersion of work activities. The software industry permits the study of the potential and limits of new ways of organizing work over borders to exploit globally the opportunities opened by the digitalization of production and products. Based on field observations of companies in four countries, we identified two distinctive models of organizing global software development. "The global project model" currently dominates the organization of global outsourcing activities in software development. In this model, multinational corporations seek to utilize cost differentials between locations and to bring products to the market more speedily by exploiting time-zone differences and the dispersed global capabilities. "The open development model" is destined to allow talented professionals around the globe to use their competences to the maximum. While not necessarily organized by multinational corporations, the open development model nonetheless affects their activities.

A common understanding in recent literature on the development of multinational corporations (MNCs) and headquarters-subsidiary relations is that some subsidiaries will have, or ought to have, a strategic role in the global organization that reaches beyond their local undertakings. This notion implies that MNC competitive advantage depends on the ability of several corporate units to assimilate and make use of knowledge created in other business contexts than their own. Hence, an MNC subsidiary must adapt and commit to the local environment in order to survive in the market competition. On the other hand, corporate sister units ’ usage of subsidiary knowledge implies that the subsidiary also must adapt and commit within the corporate environment. The dilemma here lies in the extent to which the subsidiary’s external market environment and its corporate environment are separated (or integrated) systems in terms of connections between resources and activities and knowledge development. In this paper, we will reveal empirical findings from an international project on the occurrence of strategic subsidiaries- denoted Centres of Excellence (CoE)- in MNCs. We also investigate if CoEs play an influential role over corporate decisions on investments. Our investigation reflects the extent to which the subsidiary competencies are of context-specific nature or if they affect other parts of the MNC. The paper also discusses and presents caseexamples of how the subsidiary can retain its uniqueness and sustain as a CoE even if it continues to transfer knowledge to other parts of the MNC. 3

Enzo PesciarelliMultinational experience and the creation of linkages with local firms Evidence from the electronics industry *

abstract Acquisition of capabilities is both imperative and difficult in emerging economies. This study adopts a duel network perspective to examine how the source networks and recipient networks in which international joint venture (IJV) partners operate influence inter-organizational transfer and diffusion of capabilities. We study multiple cases in the Chinese automotive industry to investigate how various factors of MNE source networks and the local recipient networks (business groups in China or qiye jituan) affect knowledge transfer from the MNE source networks into IJVs and knowledge diffusion from IJVs to their local recipient networks. The study suggests ways that the dual networks influence both types of knowledge transfer. We found both positive and negative effects of recipient and source networks on knowledge inflow to the IJVs and knowledge outflow from IJVs. The dual networks perspective is particularly relevant for emerging economies where the asymmetry between the knowledge, power and motivations of the recipient and source networks may significantly affect the knowledge transfer outcome.

The “knowledge governance approach ” is characterized as a distinctive, emerging approach that cuts across the fields of knowledge management, organisation studies, strategy, and human resource management. Knowledge governance is taken up with how the deployment of governance mechanisms influences knowledge processes, such as sharing, retaining and creating knowledge. It insists on clear micro (behavioural) foundations, adopts an economizing perspective, and examines the links between knowledge-based units of analysis with diverse characteristics and governance mechanisms with diverse capabilities of handling these transactions. Research issues that the knowledge governance approach illuminates are sketched.