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Dunning (1977)
Management
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Market imperfections
Market imperfections
There are two types of market imperfections:
-
Structural market failure - This is for
a firm to gain more or better assets than other firms (ownership),
or to be able to co-ordinate activities in geographically dispersed
areas (location).
-
Transactional (cognitive) market failure -
Intermediate goods are problematic, as plants require specific
skills to complete their transition into final products, so it can
be beneficial for a company to internalize this process
(Internalisation). This means that markets are no longer the “sole
arbiters of transactions”, as “they cannot organise a satisfactory
deal between potential contractors and contractees of intermediate
products”
“The firm is no longer a black box.” The eclectic
paradigm helps us see inside.
OLI - OA
OLI - OA + LA
OLI - I
OLI - I (market failure)
Tenets
OLI
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