The importance of language in international knowledge transfer

Lawrence Welch, Melbourne Business School
Denice Welch

Abstract

Abstract &#; Drawing on insights from managerially-oriented literature, this article explores the role of management in situations where the market transaction costs of using local, independent operators are negligible at market entry, but grow over time. A key question pertaining to this situation is: what management instruments may ensure persistent concurrence between changing pressure for internalisation in a foreign market and the effectuated internalisation of a MNE in that market?

Key Results &#; The article demonstrates the operating cost saving potential of putting in place options for gradual internalisation. Practical examples of such options are outlined. &#; It is emphasized that gradual internalisation not only pertains to appropriation of local operators’ financial assets, but also to their non-financial assets in relation to user rights, customer relations, and value added activities.