Discuss the usefulness of Dunning’s eclectic paradigm in helping us understand how firms internationalise
Discuss the usefulness of Dunning’s eclectic paradigm in helping us understand how firms internationalise.
Introduction:
Dunning Eclectic paradigm was appeared in by J.H Dunning. After this journal published, dunning eclectic paradigm becomes the most influential theory in research of foreign direct investment (FDI) and multinational (MNE). It is used comprehensively to analysis the motivation and advantages of MNE in term of FDI. In the following essay, I am going to talk about the importance of MNE and the development of eclectic paradigm in order to have a brief background for the reader. After that, I will begin to discuss the usefulness of Dunning’s eclectic paradigm in helping us understanding how firms internationalise.
The importance of MNE
MNE is acting a more and more important role in advancing globalization. According to world investment report, there are more than 60 thousands MNE in 1999. These MNE own around 500 thousands of branches which covered more than 160 countries. They have an extremely powerful influence for the global economic due to their super-large scale and capital. Lots of local company are trying to become one of the MNE but eventually more of them failed. The companies which fail to access the global market have not enough preparation and understanding of the global environment. To deal with such problem, Dunning’s eclectic paradigm provides a clear and comprehensive analysis of MNE. These analysis helps the company understand what they needed if they want to become MNE.
Development of eclectic paradigm
In 1960, Stephan Hymer proposed Monopolistic Advantage Theory in his dissertation. He thinks market failure is the main reason of MNE carrying FDI. A foreign company own monopolistic advantage that other local company haven’t so the foreign company can run their business overseas and earn much more profit. C.P.Kindleberger, H.G Johnson, R.E.Caves and F.T.Knickerbocker keep completing and modifying this theory. However,
Introduction:
Dunning Eclectic paradigm was appeared in by J.H Dunning. After this journal published, dunning eclectic paradigm becomes the most influential theory in research of foreign direct investment (FDI) and multinational (MNE). It is used comprehensively to analysis the motivation and advantages of MNE in term of FDI. In the following essay, I am going to talk about the importance of MNE and the development of eclectic paradigm in order to have a brief background for the reader. After that, I will begin to discuss the usefulness of Dunning’s eclectic paradigm in helping us understanding how firms internationalise.
The importance of MNE
MNE is acting a more and more important role in advancing globalization. According to world investment report, there are more than 60 thousands MNE in 1999. These MNE own around 500 thousands of branches which covered more than 160 countries. They have an extremely powerful influence for the global economic due to their super-large scale and capital. Lots of local company are trying to become one of the MNE but eventually more of them failed. The companies which fail to access the global market have not enough preparation and understanding of the global environment. To deal with such problem, Dunning’s eclectic paradigm provides a clear and comprehensive analysis of MNE. These analysis helps the company understand what they needed if they want to become MNE.
Development of eclectic paradigm
In 1960, Stephan Hymer proposed Monopolistic Advantage Theory in his dissertation. He thinks market failure is the main reason of MNE carrying FDI. A foreign company own monopolistic advantage that other local company haven’t so the foreign company can run their business overseas and earn much more profit. C.P.Kindleberger, H.G Johnson, R.E.Caves and F.T.Knickerbocker keep completing and modifying this theory. However,