The traditional model of multinational enterprise (MNE), ­characterized by foreign direct investment (FDI) aimed at exploiting firm-specific capabilities developed in the home country and a gradual, country-by-country, approach to internationalization dominated the global economy during much of the twentieth century. This model has its origins in the second industrial revolution of the late nineteenth century. British, North American, and continental European firms expanded around the world on the basis of intangible assets such as technology, brands, and managerial expertise. The climax of their worldwide expansion was reached during the 1960s and early 1970s, as trade and investment barriers gradually fell around the world (Chandler 1990; Kindleberger 1969; Vernon 1979; Wilkins 1974).

While significant variations in the strategy and structure of North American and European multinationals were documented at the time (e.g. Stopford and Wells 1972), and the rise of Japanese multinationals during the 1970s and 1980s added yet more diversity to the global population of multinational corporations (Kenney and Florida 1993), firms expanding from relatively rich and technologically advanced countries tended to share a core set of features.