Necessary Conditions in International Business Research

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The reference to necessary conditions is widespread in International Business (IB) research: Authors refer to necessary conditions in theorizing on internationalization patterns, on the existence of the MNE, and in explaining the choice of foreign entry modes, to mention just a few classical examples. We have screened the Journal of International Business Studies from 2000-2018 and identified 31 articles that very explicitly refer to necessary conditions either in discussing their research findings (9 articles) or in actively theorizing on specific IB relation-ships (22 articles). Interestingly only 5 studies also use a research method designed to analyze necessary conditions, namely qualitative comparative analysis. Hence, there is a huge potential for improving the theory-method-fit in the field that might ultimately help theory building. The necessity logic that underlies necessary condition analysis is fundamentally different from the sufficiency logic that underlies the classical research procedures in IB research. It allows the identification of factors that are necessary for a certain outcome, i.e. that without the necessary factor being present a certain IB outcome will simply not exist. In this manuscript, we discuss the differences between the sufficiency logic that underlies the classical research procedures used and introduce the necessity logic along with a new approach to IB research, necessary condition analysis. We illustrate the application of necessary condition analysis by analyzing data on institutional environments and foreign direct investment with reference to one of the most prominent theoretical frameworks in IB: the ownership, location and internationalization (OLI) framework introduced and further developed by Dunning. Among other things, it posits that location advantages are a necessary condition for multinational firms to opt for foreign direct investment instead of other forms of market entry. This illustrative case high-lights the value that NCA might bring to theorizing in the field of IB and is able to compare the findings generated by means of NCA to findings that result from qualitative comparative analysis used for the same purpose.
Original languageEnglish
Publication date2019
Publication statusPublished - 2019
EventEURAM 2019: Track on Necessary Condition Analysis : Method and Applications (ID 57) - Instituto Universitário de Lisboa, Lisbon, Portugal
Duration: 26. Jun 201928. Jun 2019


ConferenceEURAM 2019: Track on Necessary Condition Analysis
LocationInstituto Universitário de Lisboa
Internet address


  • Necessity
  • sufficiency
  • necessary condition analysis
  • foreign direct investment
  • institutional environments
  • IB research

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