Liena Kano

The Transaction Cost Economics Theory of the Family Firm: Family‐Based Human Asset Specificity and the Bifurcation Bias

We develop a transaction cost economics theory of the family firm, building upon the concepts of family–based asset specificity, bounded rationality, and bounded reliability. We argue that the prosperity and survival of family firms depend on the absence of a dysfunctional bifurcation bias. The bifurcation bias is an expression of bounded reliability, reflected in the de facto asymmetric treatment of family vs. nonfamily assets (especially human assets). We propose that absence of bifurcation bias is critical to fostering reliability in family business functioning. Our study ends the unproductive divide between the agency and stewardship perspectives of the family firm, which offer conflicting accounts of this firm types functioning. We show that the predictions of the agency and stewardship perspectives can be usefully reconciled when focusing on how family firms address the bifurcation bias or fail to do so.

Transaction Cost Economics (TCE) and the Family Firm

Gedajlovic and Carneys application of transaction cost economics (TCE) thinking to the family business builds on TCEs concept of asset specificity. Our analysis augments this application. We focus on TCEs behavioral assumptions, which act as drivers of failed human commitments. We show that both the exposure and response to bounded rationality and bounded reliability challenges may be different in family firms versus Chandlerian hierarchies, and introduce the new concept of family–based human asset specificity.

The New Internalization Theory and Multinational Enterprises from Emerging Economies: A Business History Perspective

The recent surge of emerging-economy multinational enterprises (EMNEs) has prompted a debate on whether existing international business theory—particularly internalization theory—can accommodate this phenomenon. Our view is that no new, EMNE-centric theory is required to study EMNEs. Using historical evidence, we argue that “new†internalization theory is sufficient to address the complexity of EMNEs, and we illustrate our argument with examples of ten successful EMNEs from Asia and the Americas. We further argue that a business history lens can illuminate the behavior of developed-economy multinationals. We show how management scholars can advance their research agendas by engaging with business history and how business historians can use internalization theory to analyze the history of multinationals.

An internalization theory rationale for MNE regional strategy

Purpose – This paper seeks to demonstrate that internalization theory, as a “complete” theory of the firm, is particularly well equipped to analyze multinational enterprise (MNE) regional strategies, thanks to its joint transaction cost economics and resource‐based foundations.Design/methodology/approach – This paper builds on recent work by Wolf, Egelhoff, and Dunemann to show that internalization theorys predictions on MNE regional strategy are superior to those suggested by several other conceptual frameworks. For each of the 11 hypotheses formulated by Wolf and his co‐authors, an alternative is proposed here that is consistent with internalization theory predictions.Findings – MNE regional strategy is an important empirical phenomenon. Internalization theory, as a powerful conceptual framework with general applicability, simplicity and accuracy, allows in‐depth analysis of MNE regional strategies.Research limitations/implications – Internalization theory scholars need to find new ways of operationali...

The Three Faces of Bounded Reliability: Alfred Chandler and the Micro-Foundations of Management Theory:

Alfred Chandler, the celebrated business historian, provided detailed descriptions of the reasons for failed human commitments and the managerial tools needed to prevent/remediate such failings in the context of large business firms. Chandlers historical narrative identifies three distinct “faces” of bounded reliability—opportunism, benevolent preference reversal, and identity-based discordance—as the main drivers of commitment failure. Adopting bounded reliability (BRel) as a micro-foundation in management studies will raise the quality and relevance of scholarly recommendations to improve managerial decision making and action, because analysis of BRel challenges closely mirrors the real-world problems facing practicing managers.

The Multinational Head Office as a Joint Value Orchestrator: Managing the Global Factory

Originality/value By linking the global factory to networks literature, we have suggested a novel way to view the concept and articulated more fully its underlying assumptions. Further research on the global factory will help advance our understanding of the dynamics of the global economy and the role of multinationals, their head offices, and their managers in shaping the economy.