The International Business and Finance Reader offers a solid foundation in major practical business decisions. The reader focuses on general patterns of international trade and the reasons behind internationalization of firms, and examines the international dimension of various functional areas. It is organized into six major sections: changing international ownership patterns, corporate strategy, basic financial decisions for multinational firms, taxation issues, and future developments. It also includes key terms, questions, and further reading suggestions.
Globalization
The term “globalization” is a broad term used to refer to the process of international trade. Through market reforms and the reduction of international trade barriers, a global economy has been created. Additionally, developments in transportation and communication technologies have made it possible for businesses to sell products and services across national borders. This process allows them to take advantage of price differences and arbitrage in various markets.
This process has created more opportunities than ever before for companies to expand their reach.
This globalization process has brought new challenges and opportunities for international business. For example, it has led to increased competition, more open markets, and a more efficient allocation of global resources. However, there are also many risks associated with globalisation. Regardless of the risks associated with globalization, these changes can be positive for the economy. International business and finance reading about globalization should address these risks and identify policies that can help countries maximize the benefits of globalization while minimizing its costs.
Globalisation has raised living standards around the world, but it has also created challenges and increased income inequality. Globalisation hasn’t been a universal good. The gains haven’t been equally distributed, and domestic policies haven’t always addressed the concerns of those left behind. Furthermore, globalisation has contributed to financial instability, which in turn increases inequality. While critics of globalisation make globalisation the culprit for all the ills of modern capitalism, the reality is that it has increased living standards.
Hymer’s theory of internationalization
Stephen Herbert Hymer’s theory of internationalization for both business and finance has been influential in many fields, including the fields of economics and political science. The theory focuses on the effect of multinational firms on their national economies, while also examining the relationships between multinational firms and nation-states. Hymer argued that multinational firms were not necessarily more powerful than nation-states, but rather were embedded within major financial centers around the world, reinforcing existing boundaries.
Hymer distinguished between two kinds of investments: direct and portfolio. Direct investments are not affected by differences in interest rates and industrial distribution is not significantly different from country to country. Direct investments, on the other hand, are associated with international operations of firms and control over production, enabling firms to suppress competition and appropriate rents. Hymer’s theory of internationalization for business and finance is the most widely accepted theory of internationalization in business and finance.
Today’s socio-economic realities are fluid, and there are new forms of MNEs. This poses new challenges to the internalization theory. Fortunately, this theory continues to be a vibrant source of research. With the latest developments in the field, it will remain the foundation for future internationalization research. Hymer’s theory of internationalization for business and finance is well worth revisiting. Its application to business and finance is critical.
Hymer’s Marxist approach to internationalization
The MIT thesis of Henry Hymer, completed in 1960, was one of the first pieces of research on the globalization of firms. It presented a theory of direct investment that argued that the laws of international trade and finance cannot account for foreign operations. Hymer’s thesis was rejected by MIT and was only made public in 1976 by his supervisor, C.P. Kindleberger, who made it a bestseller in his book American Business Abroad.
Although the Marxist approach to internationalization of business and finance was influential at the time, some scholars disagree with the thesis. For example, a Marxist view would have to acknowledge the role of private property rights in internationalization, and would require a more flexible approach to the study of finance than did neoclassical theories. In addition, Hymer’s dissertation was posthumously published and has received many criticisms for its inability to account for the role of capital in globalization.
The question of whether multinational corporations are imperial and should be allowed to exist as sovereign states has been a long-running debate. Marxian theory questioned whether the rise of multinational firms would alter Lenin’s idea of imperialism, which focused on the export of capital. As a result, some Marxist scholars have argued that multinational companies have the potential to overshadow nation-states.
