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Agency Contracts, Institutional Modes, and the Transition to Foreign Direct Investment by British Manufacturing Multinationals Before 1939

Published online by Cambridge University Press:  03 March 2009

Stephen Nicholas
Affiliation:
Lecturer in Economics, University of New South Wales, Kensington, New South Wales, Australia, 2033.

Abstract

This paper analyzes the transition from agents to branch selling as alternative institutional modes for transacting abroad by pre-1939 British manufacturing multinationals. A model to explain the shift between alternative modes is specified in terms of transaction costs. Agent opportunism and contract monitoring costs are the major transaction costs. Besides transaction costs, the frequency of transactions and the accumulation of market-specific knowledge by the principal were found to be important variables.

Type
Articles
Copyright
Copyright © The Economic History Association 1983

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References

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