The theory of international business pre-Hymer § Peter J. Buckley * Centre for International Business University of Leeds (CIBUL), Leeds University Business School, University of Leeds, Leeds LS2 9JT, United Kingdom 1. Introduction It is conventional to date the genesis of international business theory to the PhD dissertation of Stephen Hymer (1960, eventually published in 1976) The International Operations of National Firms (Buckley, 2006). It would be fairer to date the start point to John Dunning’s 1958 book American Investment in UK Manufacturing, on which Hymer relied for empirical data, but taking a 1960 date for the beginnings of a widely accepted theory of international business provides a useful cut-off point. There was, in fact, a great deal of international business theorising before 1960 but it simply did not have the required labelling. It existed in fragments, not in a unified and packaged form. 1 Hymer and Dunning provided synoptic views of the multinational firm which have been refined and improved upon since 1960. This article suggests that useful insights and partial theories were extant before our conventional starting date. Indeed, it is further argued that many theoretical advances have been ignored, or forgotten, largely because of the terminology in which they were expressed or because they were embedded in empirical, descriptive or wide ranging writings. Intellectual history is written backwards. It is arguable that insights and fragments of theory only become relevant once the tide of theorising has passed them by, and in the light of these advances, they then look relevant. Alternatively, there may be insights and advances that have been overlooked in the light of general theoretical advance. David Teece believes that ‘‘Hymer could write on an almost clean sheet of paper’’ (2006, p. 138). Teece (2006, p. 126) says ‘‘Hymer’s insights laid the foundation for a new paradigm of the multinational enterprise. Admittedly, there was not much in place at the time that might be characterized as a theory of MNE. He touched upon many important ideas; the weakness of his analysis is that he did a poor job of sorting amongst them, and elaborating the more promising’’. This paper examines the truth of this claim and attempts to evaluate writings on the multinational enterprise and foreign direct investment before 1960. There is a profound and important interaction between theorising and empirical work in the social sciences. Theories are necessary to define areas of interest, to group similar and divide dissimilar phenomena and to track changes in important social and economic categories. Theory and definition interact by gradually, repeatedly and continually redefining concepts. This interaction between theory, empirical investigation and conceptual refine- ment is also reflected in the collection of social ‘‘facts’’—in our case, statistics. International business provides an important case study of the development of these processes. From the time of Dunning (1958) and Hymer (1960), a recognisable subject area grew. Before these seminal works, it seems, there was little conceptualisation Journal of World Business 46 (2011) 61–73 ARTICLE INFO Keywords: Theory of FDI and the MNE History of thought International Business theory ABSTRACT This paper examines the theory of international business before 1960 when Stephen Hymer wrote his seminal thesis. It is shown that there existed a considerable amount of theory, but this was uncodified, unsystematic, fragmented and not institutionalised in a single academic discipline. Hymer achieved his insights in a parsimonious fashion, but this has resulted in some interesting and relevant theory being subsequently ignored. It is of considerable benefit to international business theorising to revisit this earlier theory and to recognise its insights. ß 2010 Elsevier Inc. All rights reserved. § I am grateful to Mark Casson, Mira Wilkins and two anonymous referees for comments on earlier drafts. * Tel.: +44 113 343 4646; fax: +44 113 343 4754. E-mail address: pjb@lubs.leeds.ac.uk. 1 John Dunning and Sarianna Lundan (2008) sum up their views as follows: ‘‘Prior to the 1960s there was no established theory of the MNE or of FDI. Attempts to explain the activities of firms outside their national boundaries represented an amalgam of: 1. A fairly well-formalised theory of (portfolio) capital movements (Iversen, 1935); 2. A number of empirical and largely country-specific studies on the factors influencing the location of FDI (Barlow, 1953; Dunning, 1958; Marshall et al., 1936; Southard, 1931); 3. A recognition by some economists, notably Williams (1929), that the internationalisation of some industries required a modification to neoclassical theories of trade; 4. An appreciation that the common ownership of the cross-border activities of firms could not only be considered as a substitute for the international cartels and combines (Plummer, 1934), but could also be explained, in part at least, by the perceived gains of vertical or horizontal integration (Penrose, 1956; Bye ´, 1958a): and 5. An extension of the extant theory of international capital movements to embrace the role of entrepreneurship and business competence (Lund, 1944). Lund refers to this combination of entrepreneurial ideas and financial capital as an ‘international wandering combination’.’’ Contents lists available at ScienceDirect Journal of World Business journal homepage: www.elsevier.com/locate/jwb 1090-9516/$ – see front matter ß 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.jwb.2010.05.018