GSM Lecture 2

Management > Global Strategic Management > Comparative advantage > Hymer > Vernon > Product cycle > Buckley and Casson > Internalisation > Eclectic paradigm

Eclectic Paradigm

(For more information, again see Understanding the Global Firm, lecture 3)

The eclectic paradigm, devised by Dunning (1997), is not a theory as such, but a study of social sciences. It considers a high level of interconnectedness in an economy.

OAs are not always relative to domestic OAs and also need to be judged in terms of the actual assets (Oa) and the related transaction-specific assets (Ot).

There are two main issues:

1. Increasing interactions between OAs and LAs at macroeconomic and microeconomic levels, where the latter considers the internal division of labour.
2. Shifting characteristics of internalisation advantages, which can cause the boundaries of a firm to be blurred via alliances, outsourcing and M&A. Indeed, where does the business end? Which country's tax should the employees be subjected to? Which country's rules and regulations should the MNE adhere to?

Ownership advantages

Motives for FDI

OA, LA and I

Problems?