International business research: The real challenges are data and theory

We agree with Aguinis and Gabriel that, contrary to Eden and Nielsen, international business (IB) is not uniquely complex, but argue that it faces two unique challenges. First, because it deals with cross-country phenomena, IB data are less plentiful and reliable. Second, because IB uses many imported theories, and they tend to be influenced by the national environment of their authors, they often have, taken as is, limited applicability in many of the contexts IB studies. We illustrate our twin points by examining the secondary data used in IB to measure the economic activities of multinational enterprises outside their home country, both at the country level, using foreign direct investment (FDI) data from balance of payments statistics, and at the firm level, using firm-level databases such as Orbis. We document the serious shortcomings of FDI data and the problems encountered in using firm-level data. We then highlight some of the cultural biases inherent in Williamson's version of transaction cost theory (TCT) but show how they can be overcome to arrive at a richer and more general theory that is applicable to a wider variety of contexts.

Automated summary

The article agrees that international business is not uniquely complex, but argues that it faces two unique challenges: limited and unreliable data, and limited applicability of theories. By studying secondary data, the article highlights the serious shortcomings of FDI data and problems with using firm-level data. It also examines cultural biases in transaction cost theory and proposes ways to overcome them for a more general theory.