International business has existed as a distinct field of study
for the past three decades, but it does not have a widely
accepted explanatory theory on which to base its uniqueness
as a discipline. David Ricardo's theory of comparative
advantage, Raymond Vernon's product life cycle, John
Dunning's eclectic theory and all others are essentially explanations
of business between domestic firms or regions,
as well as international firms. They explain "multidomestic"
investment and intra-national trade. Those
theories offer important insights into the functioning of
firms in business anywhere, including international firms,
but they fail to focus on the distinguishing characteristics of
business operating among different nations. Since international
business is the study of business activities that
cross national borders and, therefore, is fundamentally concerned
with the firms that undertake that business and the
national Governments that regulate them, a theory that is
unique to such business must explain the responses of businesses
to government policies and the policy-making of
Governments themselves towards international firms. Empirical
studies have distinguished international from domestic
business strategies and operations, but they have not
resulted in an international theory of cross-national business
behaviour. The lack of a proper theoretical focus has
diverted the discipline from an emphasis on policy and on
conflicts and cooperation among corporations and Governments.
A framework for constructing such a theory can be