Internalisation theory (Buckley and Casson 1976) relates the theory of the multinational enterprise (MNE) conceptually to the theory of the firm. The theory of the MNE is a theory about a firm that is spread out over space. In this theory, space has been subdivided politically into the territories of different national states. Internalisation theory explains how the organisational boundaries of the firm interact with the location of its activities to determine whether or not it becomes an MNE. This theory is more general than ordinary theories of the firm because these ordinary theories of the firm ignore the spatial dimension and implicitly confine their attention to a firm’s operations within a single nation state.