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Dunning (1977)Management > Global Firm > Lectures > Independent Research > Dunning > Market imperfections > OLI - OA > OLI - OA + LA > OLI - I
OLI - IDunning criticizes the neo-classical theory of economics as being too restrictive in its assumptions. For example, the author argues that neo-classical economists presume the existence of perfect markets and that technology and information are transferred instantaneously and free of charge. Dunning points out that the organization of production and transactions across and within national borders has been ignored. He continues, postulating that these economists have shown no interest in ownership advantages, as they tend to assume that a firm conducts only a single value-adding activity. Context is not considered. MNEs, however, are both multi-activity and internalize the transfer of intermediate goods. “It is the presence of structural and cognitive market failure that causes firms to pursue different strategies towards the exploitation of O and L assets”. Markets are imperfect, which causes a firm to internalise its OAs
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