Dunning (2000)

Management > Global Firm > Lectures > Independent Research > Dunning > Outward FDI

Outward FDI

There are a number of theories as to which firms will engage in outward FDI:

Sector - oil and pharmaceuticals are more likely to engage in outward FDI, due to their unique OAs/locational needs are outside their home countries
Country - some countries are more likely to do outbound FDI, as they have better economic histories, where core competence of firms is better recognised and promoted
Size - firms which are bigger are more likely to have more capital to take the risk of investing abroad.

The reasons for outward FDI changes over time. For example, the surge of economic growth in an emerging economy like China has encouraged firms to engage in market-seeking FDI, particularly in fast-growing firms such as telecommunications.

Location advantages will also change, such as the depletion of natural resources like oil.

The reduction of both (natural) transport costs and (artificial) trade barriers has led to more efficiency-seeking FDI.

ECommerce has also changed business greatly, eliminating some geographical issues and even revolutionising the organisation of intra-firm production and trade.