How outward investment from emerging markets affects economic development at home: using the eclectic paradigm to synthesize two IB literatures
ISSN: 1525-383X
Article publication date: 23 May 2020
Issue publication date: 21 October 2020
Abstract
Purpose
This paper aims to use the eclectic paradigm as a broad organizing framework to bring together two somewhat parallel international business (IB) literatures, one on the development effects of multinational enterprise activity and the other on the internationalization of emerging market multinationals (EMNEs). The author does so to better understand how outward foreign investment shapes economic development in firms’ home countries.
Design/methodology/approach
Considering that the characteristics of foreign investment by EMNEs likely differ from that of their developed economy counterparts and that such characteristics may have unique development consequences, the author revisits one of IB’s overarching theories to rethink how ownership, location and internalization advantages take shape and stimulate diverse development outcomes.
Findings
My narrative review and conceptual analysis indicate that the eclectic paradigm is a valuable framework that can be used to shed light on underexplored phenomena and thereby inform important policy debates. The analysis suggests that unique characteristics of EMNE investment simultaneously have positive and negative development consequences in their home countries.
Practical implications
The author sets out a research agenda that revolves around six propositions that separately relate one of these three distinct characteristics of EMNE investment to two development outcomes, namely, spillovers and direct effects on home-country employment. My propositions suggest that important policy dilemmas potentially apply, in that each of the three characteristics positively affects one of the aspects of development, but negatively the other.
Originality/value
My research agenda presents international business scholars with new opportunities to build on a history of policymaking impact, now geared toward resolving society’s grand challenge of underdevelopment.
Keywords
Acknowledgements
The author likes to thank editor Davide Castellani, Sarianna Lundan, Rob van Tulder and two anonymous reviewers for helpful comments on earlier versions of the manuscript.
This paper forms part of special section “Contemporary issues in international business: the 7th reading-UNCTAD international business conference”, guest edited by Davide Castellani.
Citation
Hendriks, G. (2020), "How outward investment from emerging markets affects economic development at home: using the eclectic paradigm to synthesize two IB literatures", Multinational Business Review, Vol. 28 No. 4, pp. 463-482. https://doi.org/10.1108/MBR-10-2019-0133
Publisher
:Emerald Publishing Limited
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