Refining the MNC-Host Government Bargaining Model: A Framework for Analyzing Bargaining Relationships

Purpose The purpose of this paper is to develop a framework that analyzes bargaining relationship between multinational corporations (MNCs) and host economies. This newly proposed framework in analyzing state-MNC relations;is called the “Neo Bargaining Model (NBM)”. Design/Methodology/Approach The paper develops the NBM and applies it unto Korean government’s case. The study employs both qualitative and quantitative approaches: case studies and statistical analyses. The case studies provide insights into the dynamics of the bargaining process while the statistical approach offers generalized results. Findings This paper studies the NBM framework that analyzes state-MNC relations. The NBM builds on previously existing bargaining models and incorporates new concepts of international business. The finding is that the bargaining power depends on party’s resources;stakes;and constraints. In order to increase bargaining power;host governments (or MNCs) need to increase their bargaining resources;decrease stakes and minimize constraints. Research Implications This study allows us to understand the factors and level of each party’s bargaining power. Using the NBM;decision makers can identify their bargaining settings;evaluate strengths and weaknesses;and obtain insights regarding what efforts are necessary for the state to increase its bargaining power.