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INTRODUCTION
This paper sets out to demonstrate how some applications of Adam Smith's insights and reasoning can significantly improve the current analysis of international business. In particular, it builds on Smith's underlying theory of knowledge, which is antecedent to his two great works - An Enquiry into the Nature and Causes of the Wealth of Nations (1776) (hereafter, WN) and The Theory of Moral Sentiments (1759) (hereafter, TMS). Smith's theory of knowledge provides a foundation for understanding the problematic nature of current theories of business, and this paper shows that the system that Smith built can help to deal with these difficulties.
Smith's theory of knowledge may be a fundamental source in understanding complex adaptive systems (Kennedy, 2008). The global economy is one such system, and the academic milieu in which this system is analysed is another. This paper therefore applies Smith's theory of knowledge both to international business practice and to international business academia.
There are many other profound thinkers from whom we can also learn (Shakespeare, Mill, Aristotle, Plato, Marx), and indeed many other innovative Scottish enlightenment "economists" (Rutherford, 2012), but none of them built a system that includes economics and business theories predicated on a fundamental theory of knowledge. Uniquely, Smith's theory of knowledge led to applications in economics (WN) morality (TMS) and legal rights (Smith, 1762-1763, 1766, Lectures on Jurisprudence (hereafter, LJ) ). Understanding the fundamentals of Smith's thinking can point to solutions of contemporary problems, helping us to avoid making the same mistakes again and again.
SMITH'S THEORY OF KNOWLEDGE
In terms of system-building, Smith practised what he preached. He believed that a system of science had to be built from first principles, and should ideally be all-encompassing. It should depend on: "certain principles, known or proved, in the beginning, from whence we account for the several phenomena, connecting all together in the same chain" (Lectures on Rhetoric and Belles Lettres (LRBL), ii: 133).
This precept Smith applied in his works on economics (WN), philosophy (TMS), legal principles (Smith, 1762-63, 1766 after LJ), the history of astronomy (Smith, 1795 after HA), linguistics (Smith LRBL) and rhetoric and literature (Smith, 1762-1763, LRBL).
Smith's theory of knowledge was centrally concerned with the principles of human nature, and was deeply grounded in...