OUTSOURCING

The rapid growth of emerging country markets and their integration into the world economy creates a double effect of a strong global pull from growing demand and a push from growing competition. This double effect seems to lead to a third wave of internationalization involving market growth, re-location and outsourcing of production as well as shifting of supplier bases from Western Europe eastwards. This is seen as a main factor behind the erosion of the industrial base of the Swedish economy and an increasing separation between firm-specific competitive advantages and country-specific comparative advantages. The responses differ between key types of firms: the domestic firm, the internationalizing firm and the fully internationalized firm. The latter type is divided into the Ethnocentric MNC, the Polycentric MNC and the Geocentric MNC. These types are mainly developed from internationalization process theory through a methodology based on abduction. Illustrations are given of responses in the form of internationalization processes of internationalizing firms and Ethnocentric MNCs to the new Eastern part of the EU and of restructuring of production of Polycentric an