In the preceding chapters, we described how changes in the international environment have forced MNEs to simultaneously respond to the strategic need for global efficiency, national responsiveness, and worldwide learning. Implementing a complex, three-pronged strategic objective would be difficult under any circumstances, but the very act of “going international” multiplies a company’s organizational complexity.

This chapter offers responses to the question ‘why regulate?’ and ‘why do regulatory regimes emerge in a particular form?’ by examining ‘theories of regulation’. While chapter 1 introduced the readers to the economic justifications of regulation, this chapter delves into the different theories that explain why we need regulation and how public and private actors interact to shape the content of regulation. These theories refer to a set of propositions or hypotheses about why regulation emerges, which actors contribute to that emergence, and typical patterns of interaction between regulatory actors. It discusses theories from several disciplinary approaches, classifying these theories into four kinds: public interest, private interest theories, systems and institutionalist approaches and ‘hybrid’ theories.

Few managers operating in today’s international business environment would dispute that this is an extremely exciting time to be engaged in almost any aspect of cross-border management. Fast-changing global developments have created big challenges that appear unusually complex, but at the same time they have opened up new opportunities that seem almost limitless.

In Chapter 3, we described how MNEs competing in today’s global competitive environment are required to build layers of competitive advantage: i.e. the ability to capture global-scale efficiencies, local market responsiveness, and worldwide learning capability. As many of these companies found ways to match one another in the more familiar attributes of global-scale efficiency and local responsiveness, they had to find new ways to gain competitive advantage. In this process, competitive battles among leading-edge MNEs (particularly those in knowledge-intensive industries, such as telecommunications, biotechnology, and pharmaceuticals) have shifted their ability to link and leverage their worldwide resources and capabilities to develop and diffuse innovation.

The international business environment has always been characterized by continual change. The task facing MNE managers is to manage that change. The situation in the third decade of the twenty-first century is no different. Important shifts in political, social, economic, and technological forces have combined to create management challenges for today’s MNEs that differ fundamentally from those facing companies in the early 2000s. Yet, despite intense study by academics, consultants, and practicing managers, both the nature of the various external forces and their strategic and organizational implications are still disputed.

In Chapter 3, we offer a brief review of the history of organizational control – from ancient bureaucracies to the behavioral theory of the firm – as well as a discussion of the theoretical foundation underlying organizational control research. We also present the results of a co-citation analysis examining 1,148 organizational control articles published between 1938 and 2022 to illuminate the field’s intellectual base and emerging research fronts. Based on the uncovered intellectual structure of the organizational control field, we review its constituent theories, outline its underlying assumptions, and briefly discuss the critical perspective on organizational control.

For most transnational companies, the twenty-first century offers exciting prospects of continued growth and prosperity. Yet, in the poorest nations on Earth, the reputation of large MNEs from the world’s most developed countries was shaky from 2000 onwards, and in some quarters, in complete tatters. Indeed, a series of widely publicized events in the early decades of the twenty-first century led many to ask what additional constraints and controls needed to be placed on their largely unregulated activities.

This chapter examines ‘Regulatory Policy’ by addressing various questions that arise in considering ‘whether’ and ‘how’ to regulate. Regulatory policy includes a range of methodologies such as cost-benefit analysis and regulatory impact assessment. This chapter focuses on the methodologies used by public regulators. This chapter discusses the methods that help regulators assess who will be impacted by regulation, whether a regulation is effective, and what its costs and benefits will be. The chapter discusses the history of regulatory policy and delves into cost-benefit analysis, regulatory impact assessment, and consultations. The chapter includes a brief analysis of better regulation policies.