Market servicing by multinational manufacturing firms: exporting versus foreign production

Buckley, P. J. and Pearce, R. D. (1981) Market servicing by multinational manufacturing firms: exporting versus foreign production. Managerial and Decision Economics, 2 (4). pp. 229-246. ISSN 1099-1468 doi: 10.1002/mde.4090020404

Abstract/Summary

The foreign market servicing behaviour of multinational manufacturing firms evolves over time as a result of the firms' reaction to internal and external pressures. The interplay of immobile ‘location factors’ with internal ‘ownership factors’ under the control of individual enterprises exercises a powerful influence on the choice between exporting and foreign investment. Plant economies of scale encourage exporting, whilst firm level economies of scale, such as the internalization of the fruits of research, may predispose the firm towards foreign investment. Socio-political and cultural elements arising particularly from the nationality of ownership of the firm also influence market servicing strategy.