Internalisation theory explains how the boundaries of firms are set at the margin where the advantages of internal coordination are just offset by the costs of supplanting external markets. Internalisation is a general principle that can be used to explain the boundaries of any institution in...

The paper develops a theoretical link between foreign investment, scale and reversibility in the banking industry. This link is used to formulate hypotheses that are empirically examined with a unique data set collected through interviews with senior managers of multinational banks in London....