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GSM Lecture 3Management > Global Strategic Management > Methods of internationalisation > Factors > OLI framework > Uppsala model > Process of FDI > Network/Systems theory
Network/Systems theoryA system means "a regularly interacting or interdependent group forming a unified whole". Institutions are "sets of common habits, routines, established practices, rules, or laws that regulate the interaction between individuals and groups". Institutions create the setting within which economic activity is undertaken and establishes the ground rules for interaction between the various economic actors. Systems are built on relationships between firms, which have worked with and known each other over relatively long periods of time. Network theory argues that internationalisation depends on the firm's network relationships (arguably an Ot) rather than a firm-specific advantage (Oa). A close network between firms means that when one firm moves abroad, all the related companies do too, although this can be difficult. An example of network theory in action is the Japanese keiretsu. |
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