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'''The Reading School of International Business''' is widely understood in the field of international business (IB), management and economics to embody a stream of conceptual, and theoretically-driven empirical research, and consists of a group of economists that have a common approach to analyzing [[multinational enterprise]] and [[foreign direct investment]].<ref>Buckley, P.J. (1985), “The Economic Analysis of the Multinational Enterprise: Reading versus Japan?”, Hitotsubashi Journal of Economics, Vol. 26 No. 2, pp. 117-24</ref>  Some are based in the Department of Economics and in [[Henley Business School]] at the [[University of Reading]], England, but membership is international. The Reading School builds upon the pathbreaking theoretical work of [[Peter Buckley (academic)|Peter Buckley]] and [[Mark Casson]] on [[internalization theory]].<ref>Buckley, P.J. and Casson, M.C. (1976) “The Future of the Multinational Enterprise”, New York, Holmes and Meier</ref> This was complemented by simultaneous work by [[John Harry Dunning|John Dunning]] as he developed the [[eclectic paradigm]] of international business as an envelope explanation containing three principal drivers of foreign direct investment, comprising ownership (O); location (L); and internalization (I).<ref>Dunning, J.H. (1977) “Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach”, in Ohlin, B., Hesselborn, P., and Wijkman, P.M. (Eds), “The International Allocation of Economic Activity: Proceedings of a Nobel Symposium Held at Stockholm”, Macmillan, London, pp. 395-418</ref><ref>Dunning, J.H. (1981) “International Production and the Multinational Enterprise”, Allen and Unwin, London</ref>  The Reading School approach continues through the work of its academic disciples around the world, as well as through The John Dunning Centre at [[Henley Business School]], [[University of Reading]], under the directorship of [[Rajneesh Narula]].<ref name="Henley Business School">[http://www.henley.ac.uk/research/research-centres/the-john-h-dunning-centre-for-international-business/] Henley Business School</ref>
==Origins and Growth==
The term ‘Reading School’ was first identified in 1978 by the Japanese economist Kiyoshi Kojima (1920–2010),<ref>Kojima, K. (1978) “Direct Foreign Investment : A Japanese Model of Multinational Business Operations”, Croom Helm, London, 246pp</ref> when he criticized the explanation of the post-war growth of multinational enterprises made by scholars at the [[University of Reading]]. Kojima argued that Western multinationals were monopolies that distorted the international allocation of resources rather than improved it.<ref>Kojima, K. (1982) “Macroeconomic versus International Business Approach to Foreign Direct Investment”, Hitotsubashi Journal of Economics, Vol. 23 No. 1, pp. 1-19</ref> The Reading School, by contrast, emphasized the efficiency gains that multinational enterprises can generate in a world of imperfect markets.<ref name="Rugman, A.M. 1981">Rugman, A.M. (1981) “Inside the Multinationals: The Economics of Internal Markets”, Columbia Press, New York. Reissued by Palgrave Macmillan in 2006 as Inside the Multinationals, (25th Anniversary Edition), Palgrave Macmillan, Basingstoke</ref> They argued that multinationals shared technologies between parent firms and subsidiaries, and between one subsidiary and another, thereby transferring technologies to countries that did not have the resources to develop them themselves.<ref>Narula, R. and Zanfei, A. (2005) “Globalization of Innovation: The Role of Multinational Enterprises”, in Fagerberg, J., Mowry, D.C., and Nelson, R.R., “The Oxford Handbook of Innovation”, Oxford University Press, Oxford, UK, pp. 318-47</ref><ref>Narula (2013) “Exploring the Paradox of Competence-creating Subsidiaries: Balancing Bandwidth and Dispersion in MNEs, Long Range Planning.[https://dx.doi.org/10.1016/j.lrp.2013.10.006]</ref>
The Reading School accepts that high-technology firms may possess a degree of monopoly power, but it argues, following [[Joseph Schumpeter]], that monopoly profits can reward [[innovation]].<ref name="Rugman, A.M. 1981"/> The Reading School approach argues that under certain conditions it is best for society to allow multinationals to decide for themselves whether to retain control of their technologies through foreign investment or to partner with local firms instead.<ref>Dunning, J.H. (1958) “American Investment in British Manufacturing Industry”, Allen and Unwin, London</ref>
[[Internalization theory]] and the [[eclectic paradigm]] have been refined over the last 40 years to become the bedrock explanations of [[multinational enterprise]] activity. The founder members of the Reading School were [[John Harry Dunning]] (1926–2009), [[Peter Buckley (academic)|Peter Buckley]], [[Mark Casson]], Robert Pearce <ref>[http://www.reading.ac.uk/abpout/staff/r-d-pearce.aspx] University of Reading</ref> and John Cantwell.<ref>[http://www.business.rutgers.edu/faculty-research/directory/cantwell-john.aspx] Rutgers University</ref> Dunning was Head of the Department of Economics at the [[University of Reading]], 1964-87 (later Professor at [[Rutgers University]], New Jersey), Buckley was Research Fellow at [[University of Reading]] in 1973-4 (later Professor at [[University of Bradford]] and [[University of Leeds]]), Casson was lecturer in Economics (later Professor and Head of Department) at [[University of Reading]], Pearce was Research Fellow (later Professor) at [[University of Reading]] and Cantwell was Research Fellow (later Professor) at [[University of Reading]] and then [[Rutgers University]]. Buckley and Casson promoted [[internalization theory]], whilst the others promoted Dunning's [[eclectic paradigm]]. Cantwell later espoused an evolutionary [[resource-based view]] of multinationals, while simultaneously also contributing to the eclectic paradigm.<ref>Cantwell, J., Dunning, J.H. and Lundan, S.M. (2010) “An Evolutionary Approach to Understanding International Business Activity: The Co-evolution of MNEs and the Institutional Environment”, Journal of International Business Studies, Vol. 41, pp. 567-86</ref><ref>Cantwell, J. and Narula, R. (2001), “The Eclectic Paradigm in the Global Economy”, International Journal of the Economics of Business, Vol. 8 No. 2, pp. 155-72</ref>
Aside from scholars based at [[University of Reading]], visiting scholars in the 1970s and 1980s were instrumental in debating and refining the Reading School approach. Canadian economist [[Alan M. Rugman]] (1945-2014) visited in 1976/77 on sabbatical, and in subsequent years, Rugman became an influential exponent of the Reading School approach, extending [[internalization theory]] to address policy issues in business taxation and trade regulation. He returned to [[University of Reading]] in 2008 and was Head of International Business and Strategy in [[Henley Business School]]. Other notable visitors were Seev Hirsch, founding member of the Leon Recanati Graduate School of Business Administration at [[Tel Aviv University]];<ref name="Tel Aviv University">[http://recanati-bs.tau.ac.il/Eng/?CategoryID=1040&ArticleID=1777&dbsAuthToken=tdPocRtuaZ&rnd=7683730] Tel Aviv University</ref> Stephen Magee ([[University of Texas at Austin]]); [[David Teece]], visiting in 1989, now at University of California, Berkeley; Thomas G. Parry, visiting in 1975; and Masahiko Itaki in the late 1980s. In 1988 the business historian [[Geoffrey Jones (academic)]]<ref name="Harvard Business School">[http://www.hbs.edu/faculty/pages/profile.aspx?facid=24276] Harvard Business School</ref> joined the economics department, and Reading School thinking began to influence business and economic history (Jones left in 2002 and is now Professor of Business History at [[Harvard Business School]]). Sarianna Lundan, a Ph.D. student of [[John Harry Dunning|John Dunning]] at [[Rutgers University]], joined [[University of Reading]] in the late 1990s before moving on to [[Maastricht University]] and then [[University of Bremen]]. Lundan, along with Dunning late in his career, continued to extend the Reading School approach to [[multinational enterprise]].<ref>Dunning and Lundan (2008) “Multinational Enterprises and the Global Economy”, Edward Elger, Cheltenham</ref>
==Further Contributions of the Reading School==
A second area where Reading School theorists have made a significant impact has been the innovation and research and development performance of [[multinational enterprise]]. Major contributions have been made in this area by Robert Pearce, whose 1989 book was one of the first systematic analyses of the behaviour of the research and development activities of subsidiaries of [[multinational enterprise]].<ref>Pearce, R. (1989) “The Internalisation of Research and Development”, St. Martin’s Press, New York</ref> In parallel, [[John Cantwell (academic)|John Cantwell]] has integrated [[Internalization theory|internalization]] theory with the economics of technological change and Schumpeterian and evolutionary economics.<ref>Cantwell, J. (1989) “Technological Innovation and Multinational Corporations”, Basil Blackwell, Oxford</ref> [[Rajneesh Narula]] and Simon Collinson have established conceptual linkages between [[multinational enterprise]] activities and their use of outsourcing alliances within national systems of innovation.<ref>Narula, R. (2003) “Globalization and Technology: Interdependence, Innovation Systems and Industrial Policy”, Polity Press, Cambridge, UK</ref>
A third area of focus for the Reading School is how multinational enterprises affect economic development. Originally developed by [[Peter Buckley (academic)|Peter Buckley]] and [[John Harry Dunning|John Dunning]], this takes a macro-view of the interaction of [[multinational enterprise]] on structural change in countries. The first published paper by John Dunning <ref>Dunning, J.H. (1981) “Explaining the International Direct Investment Position of Countries: Towards a Dynamic or Developmental Approach”,  Weltwirtschaftliches Archives</ref> proposed a framework that has become known as the investment development path. This proposed that there was a systematic relationship between development and the inward and outward activities of multinational enterprises.  This was later extended by a number of collaborative contributions by [[Rajneesh Narula]] and [[John Harry Dunning|John Dunning]] on FDI and government,<ref>Dunning, J.H. and Narula, R. (1996) “Foreign Direct Investment and Governments: Catalysts for Economic Restructuring, Routledge, London, 455 pp.</ref> and more recently on development and the [[multinational enterprise]].<ref>Narula, R. and Dunning, J.H. (2000) “Industrial Development, Globalization and Multinational Enterprises: New Realities for Developing Countries”, Oxford Development Studies, Vol. 28 No. 2, pp. 141-67; Narula, R. and Dunning, J.H. “Multinational Enterprises, Development and Globalization: Some Clarifications and a Research Agenda”, Oxford Development Studies, Vol. 38 No. 3, pp. 263-87</ref> There have been a number of parallel contributions by Nigel Driffield ([[Aston University]]), Sanjaya Lall ([[Oxford University]]), Hafiz Mirza [[UNCTAD]], Rajah Rasiah ([[University of Malaya]]), Nagesh Kumar [[UNESCAP]], Jeremy Clegg ([[University of Leeds]]), among others that have further built upon this theme.  One of the core insights has been to better understand how learning by firms is motivated by the way in which foreign investors and domestic actors interact, and builds upon [[internalization theory]] and the [[eclectic paradigm]]. This theme is especially relevant to developing and transition economies, and has inspired a number of important policy studies.
==Policy Influence==
The influence of the Reading School extends beyond its contributions to academic research, and into policy-making at the highest levels. This dates back to [[John Harry Dunning|John Dunning]]’s involvement with [[UNCTAD]] in 1968 in drafting a report on the extent and pattern of UK direct investment in less developed countries (LDCs). He was appointed in 1972 to the United Nation's Group of Eminent Persons to examine the role of [[multinational enterprise]] in economic development and international relations. Dunning acted as Senior Economic Advisor to the Secretary General of the [[United Nations]] from 1991-2006.<ref name="U.N.">[http://www.unhistory.org/publications/bios/dunning.html] United Nations</ref>
Dunning was instrumental in establishing the [[UN]]’s annual flagship publication on [[multinational enterprise]] – the World Investment Report in 1991. This report has become one of the most important [[UN]] reports on [[multinational enterprise]] and development, and has become a primary reference point for most governments (now published by [[UNCTAD]]). Other members of the Reading School have been engaged in advisory and consultancy roles in writing these reports and preparing background materials, including [[Mark Casson]], [[Rajneesh Narula]] and Robert Pearce. Similarly, the [[UNCTAD]] World Investment Directory represented an extension of the work of [[John Harry Dunning|John Dunning]] and John Cantwell, The IRM Directory of Statistics of International Investment and Production, Macmillan, London and New York University Press, New York, 1987, 820pp.
==Alums and Proponents of the Reading School==
Many graduates of the Ph.D. program at [[University of Reading]] carry on the tradition and approach of the Reading School: Birgitte Andersen (Big Innovation Centre, London), Jeremy Clegg ([[University of Leeds]], UK), Mohamed Azzim Gulamhussen ([[ISCTE]], Lisbon), Nigel Driffield ([[Warwick University]], UK), Chie Iguchi (Kieo University, Tokyo), Odile Janne ([[Birkbeck, University of London]], UK), Elena Kosmopoulou ([[University of Reading]]), Camilla Noonan ([[University College Dublin]], Ireland), Pavida Pananond ([[Thammasat University]]), Marina Papanastassiou ([[Middlesex University]], UK), Robert Read ([[Lancaster University]], UK), Grazia Santangelo ([[University of Catania]], Italy), Teresa da Silva Lopes ([[University of York]], UK), Paz Tolentino ([[Birkbeck, University of London]], UK), Nigel Wadeson ([[University of Reading]]) and many others. Currently many influential members of the School have never studied or worked full-time at [[University of Reading]], although many of them visit regularly, e.g. Lorraine Eden ([[Texas A&M University]], College Station), [[Niron Hashai]] ([[Hebrew University of Jerusalem]]), [[Ram Mudambi]] ([[Temple University]], Philadelphia) and Alain Verbeke ([[University of Calgary]], Canada). Other notable contributors to the Reading School approach are Simona Iammarino ([[London School of Economics]], UK), Satwinder Singh ([[Brunel University]], UK) and Lucia Piscitello ([[Politecnico di Milano]], Italy).
==Key Publications==
*Buckley, Peter J. and Mark C. Casson (1976) The Future of the Multinational Enterprise, London: Macmillan [Basingstoke, Hants: Palgrave Macmillan, 25th Anniversary ed. 2001], 112pp.
*Buckley, Peter J.  and Mark C.Casson (1985) The Economic Theory of the Multinational Enterprise: Selected Papers, London: Macmillan, xii + 235pp.
*Buckley, Peter J. and Mark C.Casson (2009) The Multinational Enterprise Revisited: The Essential Buckley and Casson, Basingstoke, Hants: Palgrave Macmillan, x + 301pp.
*Buckley, Peter J.  and Mark C.Casson (2009) The internalization theory of the multinational enterprise: A review of the progress of a research agenda after 30 years, Journal of International Business Studies, 40, 1563–80, doi. 10.1057/jibs.2009.49
*Cantwell, John A. (1989) Technological Innovation and Multinational Corporations, Oxford: Blackwell, xvi + 239pp.
*Dunning, John H. (1977) Trade, location of economic activity and the multinational enterprise: a search for an eclectic approach, in B. Ohlin, P.O. Hesselborn and P.M. Wijkman (eds.) The International Allocation of Economic Activity, London: Macmillan, 395-418.
*Dunning, John H. (1981) International Production and the Multinational Enterprise, London: Allen & Unwin, viii + 439pp.
*Dunning, John H., Buckley, Peter J.  and Mark C. Casson (eds.) (1992) Multinational Enterprises in the World Economy : Essays in honour of John Dunning, Aldershot: Edward Elgar xix + 282pp.
*Dunning, John H. (2002) Global Capitalism, FDI and Competitiveness : The Selected Essays of John H. Dunning, Cheltenham: Edward Elgar, xi + 458pp.
*Dunning, John H. and Sarianna M. Lundan (2008) Multinational Enterprises and the Global Economy, 2nd. ed., Cheltenham: Edward Elgar, xxvi + 920pp.
*Pearce, Robert D. (1993) The Growth and Evolution of Multinational Enterprise: Patterns of Geographical and Industrial Diversification, Aldershot: Edward Elgar, xi + 176pp.
*Rugman, Alan M. (1981) Inside the Multinationals, London: Croom Helm [Basingstoke, Hants: Palgrave Macmillan, 25th Anniversary edition, 2006] xxxi + 164pp.
==References==
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{{DEFAULTSORT:Reading School of International Business}}
[[Category:University of Reading]]
[[Category:Schools of economic thought]]
[[Category:Business models]]