Dunning (2000)

Management > Global Firm > Lectures > Independent Research > Dunning > Outward FDI > OA >Theories > Today's OAs > LA > Theories > I > Theories

Theories

Orthodox Internalisation Theory (E.g. Caves, 1996; Dunning, 1993)

Resource enhancing or risk reduction reasons span market, resource and efficiency sources for engaging in outbound FDI. The aim is to capture benefits of common governance activities and reduce costs of transaction activities occurring at arm's length.

Dynamic Internalisation Theory (E.g. Buckley and Casson, 1998)

Strategic asset-seeking only, this theory argues that firms invest abroad to tap into learning and experience related assets and to speed up the innovation process.

Market Power theories (E.g. Hymer, 1960, 1976)

These theories cover market and resource-seeking reasons to conduct outward FDI, where firms grow via M&As in order to increase market power, rather than upgrade efficiency

Efficiency Related theories (E.g. Caves, 1982)

Spanning all four reasons for FDI, these theories argue that a firm captures scale related production economies. They raise technical efficiency through shared knowledge, learning and management skill.

Knowledge Acquisition and Sharing Theories (E.g. Kogut and Zander, 1994)

Strategic asset-seeking only, these theories augment existing intellectual assets to increase competitiveness.