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Abstract and Key Results
* The Uppsala model of the internationalisation process of the firm has many similarities with Penrosean growth theory but has been limited by ambiguity about the internal mechanisms of growth. Core insights from Penrose's Theory of the Growth of the Firm may advance development of the Uppsala model.
* Penrose's theory of growth is a powerful adjunct to the Uppsala model of the internationalisation process of the firm.
* We propose a variation on the Uppsala model that incorporates the dynamic and interdependent interaction between managerial choice, the formation of resource bundles and their connection to external opportunities.
Keywords
Uppsala Model, Penrose, Resources, Internationalisation, Structure, Agency Theory
Introduction
The internationalisation of the firm has attracted scholarly attention from several perspectives, but these fall into two main themes. On the one hand, and largely attributable to the dominant form of international business at the time in the mid1970s, theory emerged from an economics heritage to explain the very nature of the large MNE (Buckley/Casson 1976, Rugman 1981, Dunning 1981). Under this market internalisation theory, imperfections in international markets motivate transactions cost minimising firms to bring exchange into the firm's governance structure. The large MNE becomes a structure of geographically dispersed, internal markets (Dunning 1988, Pitelis 2002a). This explains well the nature of the large MNE, but it is static and it demands that markets are imperfect or missing (Pitelis 1991). At about the same time, a 'Nordic' school of thought, internationalisation process theory, sought to explain the process through which internationalising firms traversed as they moved into foreign markets and deepened their involvement in these markets (Carlson 1974, Johanson/Wiedersheim-Paul 1975, Johanson/Vahlne 1977, Wiedersheim-Paul/Olson/Welch 1978). This approach took on a behavioural heritage in attempting to bring dynamism into understanding the internationalisation of the firm, and it attributes internationalisation dynamics to managerial commitment, resources and acumen. While both of these explanations sometimes are identified with the process of firm internationalisation, Penrosean expansion through international extension is clearly of the latter Nordic genre.
In this paper we review the Uppsala model of internationalisation with particular emphasis upon the conceptual connections within the model to Penrosean growth theory. Existing criticisms of the Uppsala model are discussed and the potential for theoretical advancement of the model...