Caves (1996)

Management > Global Firm > Lectures > Independent Research > Caves > Failure of P assets

Failure of Proprietary assets

Proprietary assets are those which the firm can use, but not necessarily sell or license.
As a result, these assets can fail in various ways if sold or leased: Pg4

1. Knowledge does not cost anything to use, but since people want to make money, they are sold at a price or through information retention.
2. Transactions suffer from “impactedness” and “opportunism”, importance of information is exaggerated yet some of it may be retained so that it can still be sold. These are problems of trust and thus incur high transaction costs
3. An asset may be “diffuse”, as it involves a combination of assets, such as the business culture as well as the marketing tactic. This means that the asset cannot be sold or leased, as it will not work in another firm.

OLI and Transaction costs

Hypothesis

Factors for Investment and Barriers to entry

FDI

Hymer on FDI

Further comments on FDI