by Prof. Fredy Gleichner
Published 3 years ago
Updated 2 years ago
John Dunning’sEclecticModel, introduced in 1976 (Dunning, 1977) and refined by him several times since then (1988, 1993), is a key contribution to the separation of international business studies (IBS) from international economics and trade theory and to the development of global strategy.
Dunning’s eclectic approach seems to go further than the theories of previous authors in the aspect of FDI. It not only links the micro and macro elements together but also involves the explanation of international trade and international production within the same theory. Many enterprises regard this theory as a guide for engaging into FDI.
What is John Dunning's theory?
John Dunning’s 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 . He began his work by analyzing two different types of business activities. One is related with the domestic productions that have a purpose for the foreign markets and the other is related with foreign direct investment. Dunning indicated that the two activities have the same nature and he attempted to explain them both. The questions Dunning trying to answer are that why the enterprises decide to invest and produce in foreign countries then how to achieve this aim and where to be chosen as the locations.
What is eclectic paradigm?
The eclectic paradigm is a business approach that analyses whether a company should make a foreign direct investment. It is a holistic economic model to determine whether a business should expand abroad through foreign direct investment.
What does OLI stand for in a model?
Hence, we also refer to it as the OLI paradigm, OLI framework, or OLI model. OLI stands for O wnership, L ocation, and I nternalization.
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