Manag Int Rev (2015) 55:151156

DOI 10.1007/s11575-013-0196-x
BOOK REVIEW

Verbeke, A., International Business Strategy:

Rethinking the Foundations of Global Corporate
Success, 2nd Edition, Cambridge University Press, 2013
Thomas M. Fojcik

Published online: 9 January 2014

Springer-Verlag Berlin Heidelberg 2013

1 A Capsule Summary of the Book

International business strategy issues have a long tradition in the academic literature
and have been intensively discussed by practitioners and academic scholars. This book
edited by Alain Verbeke presents a critical reassessment of different conceptual
models in the literature related to international business strategy and multinational
enterprises (MNEs). Based on a simple framework that provides a synthesis of
different practitioner-oriented models in international business literature (especially
articles from Harvard Business Review), the book picks up the essence of international
business strategies and global corporate success and examines how MNEs cope with
international opportunities and challenges. In this case the book describes MNE
managers possible strategies and provides suggestions, which strategies can be used
effectively and how they can improve the performance of MNEs. This book is not
limited to a general view of best practices; it also tries to raise awareness of MNE
managers and scholars for preconditions related to successful international business
strategies. The second edition of this book expands the previous edition by considering
MNEs from emerging economies. Furthermore case studies were updated and learning
objectives as well as managerial takeaways were added. In a nutshell, the
comprehensive and strong practical approach taken in the book is highly relevant
for students and practitioners in the field of international business strategy.

2 Objective and Target Audience

The objective of the book is to contribute to the discussion on international business
strategy. By providing a comprehensive framework including different models from
T. M. Fojcik (&)
Faculty of Engineering, University of Duisburg-Essen, Duisburg, Germany
e-mail: thomas.fojcik@uni-due.de

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international business strategy literature the book strengthens knowledge about

concepts that can be applied by MNEs to improve firms performance.
Due to the practical perspective the book appears to be a well written and
insightful source for practitioners who want to respond to opportunities and
challenges of managing international operations. Furthermore, the book addresses
Ph.D. students, researchers and other scholars who want to gain a basic, but
comprehensive overview of well-known international business strategy concepts.

3 Structures and Contents

The book is divided into three main parts with a total of 16 chapters.
3.1 Part I
Within the first part (chapter 15), chapter 1 describes the unifying framework used
throughout the book. The framework consists of seven main concepts, which
integrate the best practitioner-oriented work from international business literature
(including sub-themes of multinational strategic management as theory, analysis,
location, environmental regulations and public policy). The seven concepts used in
the framework are: (1) internationally transferable (or non-location-bound) firmspecific advantages, (2) non-transferable (or location-bound) firm-specific advantages, (3) location advantages, (4) investment inand value creation through
recombination, (5) complementary resources of external actors, (6) bounded
rationality, (7) bounded reliability. In sum, chapter 1 develops an understanding of
the seven concepts of the unifying framework to lay-out the conceptual foundations
of international business strategy. Chapter 2 addresses the crucial role of firmspecific advantages. Based on Prahalad and Hamels (1990) work that core
competencies are a critical source of MNEs success, chapter 2 describes the
essence of core competencies and explains how companies can identify, build or
acquire core competencies. Furthermore this chapter states challenges associated
with the transferability of firm-specific advantages across borders and reflects
requirements for expanding internationally without a sole focus on core competencies. In chapter 3 home country location advantages are discussed. Adapted from
Porters (1990) work, chapter 3 addresses the sources of international competitiveness using the diamond model and describes a complementary view of Porter idea
by means of the unifying framework. In this sense a transformed diamond model
considering limitations of Porters initial model is presented at the end of the
chapter. Chapter 4 explores Ghemawats work and describes problems associated
with host country location advantages and managers needs to take cultural,
administrative, geographic and economic distance into account when making
decisions about global expansion. Based on the comprehensive framework of the
book, chapter 4 examines alternative perspectives dealing with distance and the
transfer, deployment and exploitation of firm-specific advantages. In this context,
chapter 4 states main limitations of Ghemawats (2001) model and highlights that
companies should assess firm- and host country-specific characteristics related to

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distance more accurately. Chapter 5 is primarily concerned with combining firmspecific advantages and location advantages. After presenting Bartlett and
Ghoshals (1986) work on how MNEs should manage their subsidiary network,
and examining complementary views of their idea, chapter 5 summarizes limitations
of the initial model and suggests possibilities of how MNE managers can assign
differentiated roles to subsidiaries to contribute to firm-specific advantages
development and how MNEs can recombine capabilities in an international context.
3.2 Part II
Within the second part (chapter 610) the book describes functional issues of
international business: innovation (chapter 6), sourcing and production (chapter 7),
finance (chapter 8), marketing (chapter 9) and managing managers in MNEs
(chapter 10). Chapter 6 focuses on international innovation and describes
Kuemmerles (1997) initial model of how MNEs manage their worldwide R&D
activities. In this context chapter 6 presents complementary perspectives and points
out limitations using the overall framework of the book, e.g. the missing alignment
of subsidiaries R&D activities and firms overall corporate goals and the nonconsideration of joint ventures or strategic alliances as alternative paths for
acquiring new knowledge. In chapter 7 an overview of international sourcing and
production issues is given, mainly based on Ferdows (1997) work related to how
MNEs can tap their foreign factories to exploit or augment the knowledge created in
the home country and thus how MNEs can acquire and develop firm-specific
advantages. After describing complementary views of Ferdows work, chapter 7
highlights main limitations in terms of that not all foreign factories are predestined
to exploit or augment MNEs knowledge and that MNEs can also use other sources
for tapping knowledge, e.g. from outsourcing activities or external suppliers.
Chapter 8 describes international finance issues mainly focusing on how MNEs
should deal with volatile real exchange rates. Based on the recommendations of
Lessard and Lightstone (1986) that MNEs should enable flexible sourcing structures
and attain the capability to vary prices in response to changes in real exchange rates
to avoid economic exposure and thus negative effects on firms competitiveness,
chapter 8 presents complementary perspectives and addresses new avenues of what
MNEs should keep in mind to avoid economic exposure. In contrast, chapter 9 sheds
light on international marketing issues. Against the background of the idea of Levitt
that MNEs should not customize products and services to cultural differences, but
rather should offer standardized products and services because of the highly
homogenized global consumer preferences, chapter 9 demonstrates arguments,
under which circumstances Levitts (1983) idea leads to bounded rationality
problems by MNE managers, managers overestimation of the transferability,
deployment and exploitation potential of firm-specific advantages and results in
defective global strategies. The last chapter (Chapter 10) in the second part of the
book addresses issues related to managing expatriates and their role in developing
and transferring firm-specific advantages. On the basis of Black and Gregersens
(1999) work that expatriation is a successful way to internationally transfer nonlocation bound firm-specific advantages, to facilitate firm-specific advantage

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development and to recombine location-bound as well as non-location bound firmspecific advantages, chapter 10 explains challenges of expatriation and depicts
alternative avenues, how MNEs can diffuse their firm-specific advantages among
internationally operating affiliates using different forms of expatriation.
3.3 Part III
The third part (chapter 1116) is primarily concerned with issues related to entry
mode strategies (chapter 1113), to the role of emerging economies in global
context (chapter 14), to MNEs from emerging economies (chapter 15) and to
international strategies of corporate social and environmental sustainability (chapter
16a and b). Chapter 11 starts with an explanation, why MNEs maintain relationships
with local distributors and under which preconditions foreign distributors affect the
firm-specific advantage development process based on the initial work of Arnold
(2000). After adding complementary views to Arnolds work, chapter 11 provides
limitations of Arnolds concept, which MNE managers should keep in mind when
using local distributors in international activities. Building on the previous chapter,
chapter 12 illustrates Hamel, Doz and Prahalads work (Hamel et al. 1989) that
strategic alliances are beneficial to develop jointly new firm-specific advantages
respectively alliance-specific advantages, if a MNE learns more from the alliance
partner than the other way round. Using the overall framework of the book, this
chapter describes limitations of Hamel et al.s concept and explains in-depth, how
MNEs can successfully establish strategic alliances without neglecting the
prevention of excessive dependency and unintended diffusion of firm-specific
advantages. Chapter 13 covers with the third possible entry mode strategy: mergers
and acquisitions. This chapter examines Ghemawat and Ghadars (2000) work, who
criticize the general belief that international mergers and acquisitions among large
MNEs from different countries and regions will ultimately lead to industry
consolidation and impressive creation of firm-specific advantages for large MNEs.
Based on this criticism and complementary views chapter 13 describes different
circumstances and conditions in which mergers and acquisitions are appropriate to
develop and exploit firm-specific advantages using the overall framework of the
book. Whereas the previous chapters discuss entry mode strategies as the main
subject, chapter 14 covers the role of emerging economies for MNEs. By
augmenting Khanna, Palepu and Sinhas concept (Khanna et al. 2005), who
determined that emerging countries are characterized by institutional voids (in the
sense of market failure), so that MNEs have to fill these voids through
recombination of capabilities to be successful in emerging markets, chapter 14
indicates further opportunities, how MNE managers can successfully operate in
contexts of institutional voids and which challenges must be taken into account.
Chapter 15 covers issues related to MNEs from emerging economies. Building on
Ghemawat and Houts (2008) work selected complementary perspectives are briefly
described. Subsequently, challenges for MNEs from emerging economies based on
developing and transferring location-bound firm-specific advantages as well as a
lack of managerial and organizational capabilities to operate internationally are
discussed in more detail. The last chapters of the book focus on the linkage between

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MNEs strategies and corporate social responsibility (chapter 16a) as well as

corporate environmental sustainability (chapter 16b). Describing concepts of Dunn
and Yamashita (2003) as well as Porter and van der Linde (1995) both chapters
examine in-depth how corporate citizenship initiatives and environmental regulations can contribute to firm-specific advantage development of MNEs. Finally, the
book closes with a briefly conclusion including further managerial insights and
directions for future research.

4 Recommendation and Critique

The book edited by Alain Verbeke provides a comprehensive and critical
reassessment of well-known conceptual models in international business literature.
All models are not considered in isolation, but are systematically discussed within
the unifying framework built in the first chapter. Although the framework of the
book is very simple and thus susceptible to criticism, it corresponds well with the
aim of the book to present issues related to international business strategy in an
easily understandable and practical-oriented way. Thats why the book is well suited
to provide a comprehensive overview of questions, challenges and opportunities of
multinational enterprises in international context. To highlight, all included case
examples, case studies and case questions help to strengthen the knowledge about
the subject discussed in the book quite well. Insofar the book is recommendable
without restrictions for students and actual as well as future managers in the field of
international business strategy, who are not familiar with this subject. Critical to
note for academic researchers, however, the book is limited because of the strong
practical orientation. Complementary perspectives or contradictory views from
reputable journals will be calledif at allonly in the appendix. A broader
scholarly review of the subject would therefore be desirable. Moreover, management implications summarized in each chapter seem very normative and could be
mistakenly understood as a guideline for successful MNE managers. Consequently,
this limitation should be more emphasized in the book, especially for the target
audience of the book. In summary, the book is appropriate for newcomers in the
topic and practitioners. Academic researchers, however, will certainly miss the
novel findings in the book.

References
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Bartlett, C. A., & Ghoshal, S. (1986). Tap your subsidiaries for global reach. Harvard Business Review,
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Black, J. S., & Gregersen, H. B. (1999). The right way to manage expats. Harvard Business Review,
77(2), 5263.
Dunn, D., & Yamashita, K. (2003). Microcapitalism and the megacorporation. Harvard Business Review,
81(8), 4754.
Ferdows, K. (1997). Making the most of foreign factories. Harvard Business Review, 75(2), 7388.

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Ghemawat, P. (2001). Distance still matters: the hard reality of global expansion. Harvard Business
Review, 79(8), 137147.
Ghemawat, P., & Ghadar, F. (2000). The dubious logic of global megamergers. Harvard Business
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Ghemawat, P., & Hout, T. (2008). Tomorrows global giants? Not the usual suspects. Harvard Business
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Hamel, G., Doz, Y. L., & Prahalad, C. K. (1989). Collaborate with your competitors and win. Harvard
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Kuemmerle, W. (1997). Building effective R&D capabilities abroad. Harvard Business Review, 75(2),
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Lessard, D. R., & Lightstone, J. B. (1986). Volatile exchange rates can put operations at risk. Harvard
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