S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics Seoul Journal of Economics vol.02(1) (Spring 1989)
New Aspects of International Subcontracting : Towards the Internationalization of Multinational Corporations
- Park, SungJo
- Issue Date
- Seoul Journal of Economics, Vol.2 No.1, pp. 69-86
- Theoretical approaches toward the multinational corporations (neoclassical theory of international division of labor, product cycle theory, location theory) seem to insufficiently cover their transnationalization process. In the recent time multinational corporations attempt to organize an efficient international subcontracting, in particular, in automotive and electronic industry with the final goal to establish the Just- In-Time production. Two strategies in this respect are evolving: the one is to transfer domestic subcontractors to the investment region ("internalization of international subcontracting"); the other refers to the set-up of a new international subcontracting system on the spot ("externalization of international subcontracting "). The first strategy favored by East Asian Multinationals implies an extremely high outsourcing ratio which gives rise to a difficult handling of the local content; Western multinationals increasingly regard the second strategy as less competitive, prefering to internalize international subcontracting which is being, however, constrained by the lack of logistic capacity. Taking into consideration trends of the ongoing international subcontracting a new analytical eclectics of theoretical views appears to be necessary.