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International Business

Transferring tacit know-how through licensing or joint venture: Is opportunism really redundant?

Alex Eapen, University of Sydney

23rd Feb 2012  11:00 am - Room 214/215, H69 - Economics and Business Building

Abstract

Transaction cost theory (TCE) scholars argue that MNEs exist due to failure of markets, a main stimulus of which is opportunism. On the contrary, proponents of the knowledge based view (KBV) claim that the opportunism assumption is redundant; the existence of the MNE can be explained without recourse to opportunism. This debate still persists (e.g., Fransson, Hakanson, & Liesch, 2011), but a key feature is that despite competing causal mechanisms, predictions of TCE and KBV are identical. We see this lack of predictive uniqueness as the prime bottleneck in resolving the question of whether opportunism matters, and contribute to the debate in two ways: (1) conceptually, we exploit the contingency logics inherent in KBV and TCE to build distinctive predictions from both theories and (2) empirically, we test the competing logics of both theories, bringing empirical evidence to the debate which has this far been largely on conceptual turf alone. Our results suggest that, subject to certain caveats, opportunism matters

Bio

Dr. Alex Eapen earned his doctoral degree from Tilburg University, The Netherlands in June 2007, and is currently a lecturer in International Business at the University of Sydney Business School. His research seeks to better understand the impact of multinational enterprises (MNE) on host country firms and economies. The question his research seeks to answer is: what are the conditions that make international expansion of MNEs beneficial to host country firms? This issue has far reaching implications, not only theoretically, but also for practice. To find the right answers, his research has focused on better understanding (1) the spillover process and (2) the entry and evolution of foreign firms in a host country. His research has been published in journals such as Journal of International Business Studies and Canadian Journal of Administrative Sciences.