Caves (1996)

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Caves (1996) - The MNE and Economic analysis

Proprietary assets
Proprietary assets are those which “explain the non-production bases for the MNEs”. Pg3
These assets have certain properties:

• The firm can attain the assets
• The assets differ from those owned by other firms
• The assets or their productivity are can be moved between countries
• The assets may decrease in value (or to improve), but over a long period of time

Most firms have more than one type of asset, which vary in extent of tangibility and specificity.
Assets, such as knowledge or a set of skills, can improve product differentiation.
Assets can be trade marks or patents.

“It is important that the proprietary asset, however it creates value, might rest on a set of skills or repertory of routines possessed by the firm’s team of human (and other) inputs” (Info from Nelson & Winter, 1982, Chapter 5). Pg3

Failure of Proprietary assets

OLI and Transaction costs

Hypothesis

Factors for Investment and Barriers to entry

FDI

Hymer on FDI

Further comments on FDI