ABSTRACT
The multinational enterprise (MNE) may enter a market to take advantage of a locational factor such as relatively low national tax rates for example, but by doing so will increase the potential for transfer pricing that is only available through internal organisation. In order for a firm to compete with foreign enterprises in their own market as an MNE, the firm must possess certain advantages to compensate for additional costs of selling or producing in an alien environment. A firm specific advantage may be regarded as an O advantage that is exploitable by an individual company only, and therefore not available for use by others unless directly specified. The notion that product quality provides the motivation behind internalisation of the firm's assets in international construction leads to further analysis of the nature of the industry that may be derived from the benefits of internal organisation.
