The New MNE: ‘Orchestration’ Theory as Envelope of ‘Internalisation’ Theory

Abstract

We propose an orchestration theory of the (new) MNE as an envelope of internalisation theory and its variants. We first critically assess extant varieties of internalisation theory of the MNE. We then discuss their limitations and explain why it is important to move from internalisation to an orchestration theory of the MNE. Orchestration theory, rooted in and encompassing the dynamic capabilities framework, helps explain a number of MNE phenomena that challenge internalisation theory, including entrepreneurship, learning, co-opetition, open innovation, value capture and market and ecosystem co-creation. It entails much more than the make-or-buy decision of internalisation theory and it is more closely aligned to today's global environment, conceptual developments in cognate fields and the strategies and practices of MNEs. We also discuss prospects for further research using an orchestration approach. I.

The structural reshaping of globalization: Implications for strategic sectors, profiting from innovation, and the multinational enterprise

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Internalization theory for the digital economy

“…Internalization theory for the digital economy modularity as a measure of the ease with which a firm's FSAs can be integrated or bundled with the assets of potential local partners. This fusing of foreign and local firms' FSAs in new ways to create innovative capabilities leads to a recombinant advantage that undergirds the competitive advantage of the MNC (Collinson & Narula, 2014;Pitelis & Teece, 2018). This also helps to overcome the location-boundedness of some FSAs, if they are highly embedded in the organization or environment or specific to the market (Rugman & Verbeke, 2004).…”

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