When Businesses Cross International Borders

Business firms are currently being forced to make a variety of changes to respond to both threats and opportunities in the international economy. This volume examines in detail the many ways successful companies establish a presence in overseas markets. The authors classify operations in the international environment into four categories. First, companies that do not want to actually establish local production facilities can export directly to targeted markets or engage in turnkey operations. Historically, this has been one of the most important means of acquiring international markets and continues to be a viable strategy today. Second, establishing contractual relationships with foreign companies is effective when a firm does not want to operate a wholly earned subsidy. Third, operating wholly owned facilities in other nations is one of the most preferred methods of gaining and maintaining a presence overseas. Firms typically employ this strategy either by building new facilities or by merging with or acquiring existing companies. The authors demonstrate how the approach used by business depends on the nature of the obstacles a host government places before foreign commerce.

HARVEY S. JAMES, Jr. is the John M. Olin Fellow at the Center for the Study of American Business and also a doctoral student in the Department of Economics at Washington University in St. Louis.

MURRAY WEIDENBAUM holds the Mallinckrodt Distinguished Professorship at Washington University, where he is also director of the Center for the Study of American Business. He serves as cochairman of the International Research Council at the Center for Strategic and International Studies. In 1981-1982, Dr. Weidenbaum was chairman of the Council of Economic Advisers under President Ronald Reagan.