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Re-orienting the paradigm: path dependence in FDI theory and the emerging multinationals

Jan Knoerich (King’s College London, London, UK)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 10 December 2018

Issue publication date: 15 February 2019

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Abstract

Purpose

The purpose of this paper is to analyze how path dependence in the evolution of major theories of foreign direct investment (FDI) locked in a theoretical perspective of the multinational enterprise that focused on asset-exploitation. This perspective is challenged by recent contradicting observations of multinationals from China and other emerging economies. A decisive re-orientation of FDI theory is proposed as a way forward to resolve this tension.

Design/methodology/approach

Placing FDI theories into the context of FDI patterns prevailing at the time they were developed, Thomas Kuhn’s framework on the evolution of scientific knowledge is employed to track how the mainstream FDI theory emerged, went through a period of normal science and then approached a crisis of science in this field.

Findings

The evolution of FDI theory is strongly path-dependent, which made it difficult for theory to effectively incorporate new conceptual discoveries and empirical findings about the nature of FDI activity.

Originality/value

FDI theory would benefit from a full re-orientation to a demand-oriented perspective which places the pursuit of advantages, assets, resources, etc., at the core of the theory. Such a change is implicit in many recent theoretical advances and would assure theory is generalizable to all types of FDI.

Keywords

Acknowledgements

The author would like to thank Agatha Kratz and three anonymous reviewers for their valuable comments on earlier drafts of this paper.

Citation

Knoerich, J. (2019), "Re-orienting the paradigm: path dependence in FDI theory and the emerging multinationals", International Journal of Emerging Markets, Vol. 14 No. 1, pp. 51-69. https://doi.org/10.1108/IJoEM-04-2017-0123

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited