The theory of the MNE@64: Building on Hymer's legacy

Abstract We look at the past, present and possible futures of the theory of the multinational enterprise (MNE). We argue that the modern theory of the MNE, propounded by Stephen Hymer, viewed rivalry reduction and/through the internalization of advantages by firms as a strategy to acquire market power. Hymer anticipated the modern theory of the domestic firm and strategic management and later the transaction costs‐focused ‘internalization theory’. While ‘internalization theory’ focused on efficiency, Hymer viewed efficiency and market power as complementary. His theory of the MNE was influential in the development of International Business scholarship and has itself developed through cross‐fertilization with adjacent fields. It has significant scope for further development by leveraging resource‐based, international entrepreneurship and dynamic capabilities ideas. It faces technical and substantive challenges, notably that its focus on the sustainability of firm‐level competitive advantage underplays wider multilevel environmental, economic and social sustainability challenges.