ABSTRACT
New institutional economics (NIE) and international business (IB) research share a similar inception: the inability of prevailing theories to explain readily observable phenomena. For early IB theorists, the elusiveness of the multinational enterprise in orthodox economics spurred the development of new models and conceptualisations of cross-border economic activity to explain both the emergence of multinational firms and the industrial and geographic distribution of foreign direct investment (FDI). For new institutional economists, the aridness of neoclassical economics lay in the abstraction of its black box treatment of the firm, and its inability to explain the differential growth and development of societies across time and across geographic space.
