In a July 2026 article in Management International Review, “Orchestration Theory of the Multinational Enterprise in Digital Platform and AI Ecosystems," Professor David J. Teece and Professor Christos N. Pitelis advance orchestration theory as a framework for understanding firm organization and strategy in the current era.
Modern multinational enterprises (MNEs) can be viewed not simply as organizations that internalize transactions, but as focal firms that orchestrate globally distributed systems of resources, capabilities, partners, and complementary assets. In the digital platform and AI era, control increasingly derives from technological architectures, data flows, and ecosystem positioning rather than ownership alone. By integrating internalization theory, dynamic capabilities, and ecosystem research, the paper proposes a reconceptualization of the MNE that better reflects the realities of contemporary international business.
The rise of digital platforms, business ecosystems, and AI is transforming MNE activity and challenging established theories of international business. While internalization theory has long explained the existence and boundaries of the MNE, its focus on transaction costs and governance choices is increasingly constrained in environments characterized by ecosystem-based value creation and technologically mediated control.
The authors reference and update earlier scholarly work on strategy, innovation, the theory of the firm, and dynamic capabilities, advancing orchestration theory to explain value creation and capture in an AI and digital era.