Ownership advantages and the eclectic paradigm abstract in john dunnings eclectic paradigm firms need to have ownership, location, and internalisation advantages in order to cross borders and engage in foreign direct investment. Critically analyse how dunnings oli paradigm seeks to explain the why, how and where organisations such as burger king invest. Lund university school of economics and management department. Chapter 2 puts forward the original formulation of the eclectic paradigm, which was initially proposed as an eclectic theory of international production. Robert mundell has tried to explain the fdi through a model of international trade. This eclectic approach to the theory of international production may be summa rized as follows. Pdf the eclectic paradigm in the global economy researchgate. An eclectic paradigm, also known as the ownership, location, internationalization oli model or oli framework, is a threetiered evaluation framework that. Eclectic paradigm financial definition of eclectic paradigm. The eclectic paradigm itself is non an account of the mnc instead it helps explicate the degree, determiners and forms of the foreign value added activities international production of houses, and or states. Theory dunnings eclectic paradigm oli model youtube.
Dec 16, 2003 the eclectic paradigm is one of the most enduring frameworks in international business today. Multinational enterprise entry modes in subsaharan africa. A restatement and some possible extensions, journal of international business studies, 1988, pp. Eclectic paradigmoli paradigm explained with examples b2u. The new theories of international trade, still cannot explain foreign direct and other forms of international investment h osseini 2005. The eclectic theory of international production, originally proposed by dunning in 1976, was proposed in an attempt to characterize the determinants of mne foreign production. It has been written to facilitate students understanding of the motives and theories of foreign production e. Article pdf available in international journal of the economics of. A framework for synthesizing and comparing theories of international business from different disciplines or perspectives, london and new york. The eclectic or oli paradigm examines the interplay between the firms ownership advantages o, the locational advantages of host countries l and the internalization advantages derived from coordinating economic activity within the firm i. An introduction to the eclectic paradigm as a meta. It does so in the light of the changing characteristics of mne activity and of the global economic scenario.
The eclectic paradigm as an envelope for economic and business theories of mne activity john h. This article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of mne activity. For example, according to the paradigm, ownership, location and internalisation advantages influence a firms entry mode decision by affecting. Are competitive or ownership advantages necessary to explain international production. In the edited volume, cantwell has carefully selected three exclusive pieces by.
The first factor is whether a comparative advantage exists for the product the company wishes to develop in the foreign country. Dunning in 1979 ownership advantages specific advantages refer to the competitive advantages of the enterprises seeking to engage in foreign direct investment. Cantwell 2015 gives a useful account of the classical perspectives of international business. Root 1994 entry strategies for international markets. Responded to criticisms by internalization theorists, the development and application of the eclectic paradigm to. The concept of the eclectic paradigm of international production was first put forward by the present author in 1976 at a presentation to a nobel symposium in stockholm on the international allocation of economic activity. Created using powtoon free sign up at create animated videos and animated presentations for free. A critical comparison of internationalisation theories. This paper applies dunnings eclectic paradigm of ownership, location and internalization oli advantages to the international activity and performance dynamics of the chinese family enterprise cfe.
The paradigm offers a model from which an account can be obtained. Another extension of the eclectic paradigm of international production is the consideration of firmfinancing differences dunning, 1988. It suggests that by dynamizing the paradigm, and widening it to. This paper updates some of the authors thinking on the eclectic paradigm of international production, and relates it to a number of mainstream, but contextspecific economic and business theories. The second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only. The ones marked may be different from the article in the profile. Pdf the eclectic oli paradigm of international production. It ascends from alibers 1983 dissatisfaction with the eclectic paradigm, and his focus on financing as a determinant of multinationality. Uppsala school master of arts daniela margardt term paper business economics miscellaneous publish your bachelors or masters thesis, dissertation, term paper or essay.
Dunning 2000 the eclectic paradigm as an envelope for economic and business theories of mne activity. May, 2019 an eclectic paradigm, also known as the ownership, location, internationalization oli model or oli framework, is a threetiered evaluation framework that companies can follow when attempting to. Dunning university of reading and rutgers university abstract. The second part of the article considers a number of possible extensions of the paradigm and. The usefulness of the eclectic paradigm essay example. This paper will be based on dunnings eclectic oli paradigm as theoretical foundation, and is a case study of the internationalization strategy of the chinese hightechnology mne huawei technology corporation. The eclectic oli paradigm of international production. A restatement and some possible extensions created date.
International journal of the economics of business. Past, present and future this article describes the. This article describes the origins, and traces the subsequent evolution of the eclectic paradigm from the mid1950s to the present day. This paper first sets out the main features of the eclectic theory of international production and then seeks to evaluate its significance of ownership and location specific variables in explaining the industrial pattern and geographical distribution of the sales of u. Reconciling internalization theory and the eclectic paradigm. As is well known among ib scholars, the eclectic paradigm was first incarnated as the eclectic theory by john dunning in 1977, but rather quickly metamorphosed into a paradigm dunning, 1988, 2001, or a metaframework for the conduct of ib analysis and ib concept or theory building. Nov 27, 2018 created using powtoon free sign up at create animated videos and animated presentations for free. Developing the eclectic paradigm as a model of global strategy core.
This cited by count includes citations to the following articles in scholar. This paper first sets out the main features of the eclectic theory of international production and then seeks to evaluate its significance of ownership and locationspecific. The internationalization of chinese family enterprises and. Aug 27, 2002 extract introduction when the concept of the eclectic paradigm of international production was first put forward by the author in 1976 at a presentation to a nobel symposium in stockholm on the international allocation of economic activity,1 the intention was to offer a holistic framework by which it was possible to identify and evaluate the significance of the factors influencing both the.
Dunnings eclectic paradigm of international production and to. This paper presents comprehensive data on the growth, structure and forms of involvement of multinational enterprises in the international hotel industry, and uses this data to provide empirical support for the eclectic theory of international production. In particular, it argues that, due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or oli, paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms. This case study can be used for teaching purposes in international management classes at bachelor level. Journal for the advancement of developing economies 20 volume 2 issue. Dunning 3 the eclectic paradigm of international production. Eclectic paradigm a theory that posits three types of advantages benefiting a multinational corporation. The second part of the article considers a number of possible extensions of the paradigm and concludes by asserting that it remains a robust general framework for explaining and analysing not only the economic rationale of.
It is difficult to find a major area of international business thinking and research that has been unaffected, either directly or indirectly, by dunnings articulation of the nature of multinational enterprise mne production and the factors affecting the distribution of mne activity. This paper will be based on dunnings eclectic oli paradigm as theoretical foundation, and is a case study of the internationalization strategy of the chinese hightechnology mne. The article concludes by asserting that the eclectic paradigm still remains a powerful and robust framework for examining contextual specific theories of foreign. Examining the eclectic paradigm as a framework in international economics paz estrella tolentino international journal of the economics of business. An approach to analyzing whether it is beneficial for a company to make a foreign direct investment.
Download citation the eclectic oli paradigm of international production. Extract introduction when the concept of the eclectic paradigm of international production was first put forward by the author in 1976 at a presentation to a nobel symposium in stockholm on the international allocation of economic activity,1 the intention was to offer a holistic framework by which it was possible to identify and evaluate the significance of the factors influencing. Reappraising the eclectic paradigm in an age of alliance. Sep 14, 2016 dunning 1979 toward an eclectic theory of international production. A holistic economic model used to evaluate a companys strategy to expand its operations through foreign direct investment. The oli or eclectic approach to the study of foreign direct investment fdi was. The eclectic paradigm, also known as the oli model or oli framework oli stands for ownership, location, and internalization, is a theory in economics. The eclectic paradigm, namely the oli paradigm was put together by the economist john henry dunning 19272009 in the late 1970s. Spanning more than three decades, the 16 contributions trace the evolution of his thoughts and ideas as an economist, from his first article on the determinants of international production, published in 1973, to his most recent essay on relational assets, networks and global business activity, completed in 2002.
The eclectic paradigm examines the interactions between o, l, and i at industry level. Dunnings eclectic paradigm of international business essay. An eclectic paradigm, also known as the ownership, location, internationalization oli model or oli framework, is a threetiered evaluation framework that companies can follow when attempting to. In trying to explain the determinants of mne investment activities at the firm level, perhaps the most influential framework is the oli eclectic paradigm of international production as it offers. How can it be adapted to analyze new research questions, and how does it relate to newer developments of.
International business and the eclectic paradigm aims to reassess the contributions of the paradigm to the development of international business research, and its suitability for contemporary research agendas. The eclectic paradigm argues that international market failure underlies the existence of. Through the lens of dunnings paradigm, we trace the role of cultural and economic factors in the success of this important form of organization. International production, international production management. It is not until the late 1980s that dunning adopted the term eclectic paradigm and began to argue that other theories e. The model applies common economic factors to determine if the value derived from the strategy is greater than alternative transnational strategies. The article concludes by asserting that the eclectic paradigm still remains a powerful and robust framework for examining contextual specific theories of foreign direct investment and international production. Dunning reading university, uk and rutgers university, usa abstract this paper updates some of the authors thinking on the eclectic paradigm of international production, and relates it to a number of mainstream, but contextspeci. John dunnings eclectic theory developed in 1977 mainly attempts to explain economic issues involved in various countries, especially for the questions of international business and international production. The eclectic paradigm a framework for synthesizing and or. The theory has now passed its silver anniversary, and this article seizes the opportunity to give the paradigm a routine check. The eclectic paradigm as an envelope for economic and. Dunning 1979 toward an eclectic theory of international production. A restatement and some possible extensions and determinants of international production, investment development path of dunning and narula 1993, are the few to mention.
Venaik 200292mkt australian graduate school of management, university of. The usefulness of the eclectic paradigm as a framework for combining and relating alternative theories of international business, and in coping with changes over time in the practice of international business. These advantages may arise either from the firms privileged. In this way, it is much closer to conventional international economics than is the rbv approach of internalization theory. Using history to help refine international business theory. Towards an eclectic theory of international production. It is a further development of the internalization theory and published by john h. An introduction to the eclectic paradigm as a metaframework for the crossdisciplinary analysis of international business august 6, 2015. Toward an eclectic theory of international production. How dunnings oli paradigm explains where organisations investment. Empirical evidence of spanish offshoring activities the. Dunnings eclectic paradigm of international business essay sample. Lund university school of economics and management.
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