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This paper seeks to explicate a dynamic theory of competition, i.e. the resource‐advantage theory of competition, with the aim of developing a theoretical foundation for the eclectic paradigm of foreign production.

The paper is conceptual in approach.

The paper develops a set of five criteria that should be met by any theory that attempts to ground the eclectic paradigm. In addition, it demonstrates that the resource‐advantage theory of competition meets all of these criteria.

By providing a theoretical foundation for the eclectic paradigm of foreign production, the paper provides researchers with a broader perspective from which to investigate multinational enterprise competition.

The usefulness of frameworks, such as the eclectic paradigm of foreign production, is limited when they are not grounded in positive theories. By grounding the eclectic paradigm of foreign production, this paper enhances the paradigm's usefulness.

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the fit is not perfect. The main reason for misalignment is that Dunning is focused upon outward FDI into host economies, whereas Rugman’s matrix is for firm‐level strategy covering MNE activity in both home and host countries

John Dunning introduced the OLI (Ownership‐Location‐Internalization) paradigm 37 years ago to explain the origin, level, pattern, and growth of MNEs’ offshore activities. Over the years, OLI has developed into perhaps the dominant paradigm in international business (IB) studies. However, the costs of being a paradigm are reflected in Dunning’s efforts to include an ever‐expanding array of IB theories and phenomena under the OLI “big tent.” In this paper, we focus specifically on the O in the OLI paradigm, tracing the history of Dunning’s ownership advantages. We argue that the modifications of O advantages over the past 37 years, as Dunning attempted to bring all IB phenomena and IB‐related theories under the OLI “big tent,” has had mixed results. However, we continue to believe that the typology of ownership advantages retains its relevance for IB scholars; that O advantages cannot and should not be subsumed within internalization advantages; and that O advantages are necessary for explaining the existence and success of the MNE as an organizational form

The eclectic paradigm is one of the most enduring frameworks in international business today. It is difficult to find a major area of international business thinking and research that has been unaffected, either directly or indirectly, by Dunning’s articulation of the nature of multinational enterprise (MNE) production and the factors affecting the distribution of MNE activity. His structuring of the factors underlying the choice of production location and internalization of intermediate product transactions laid the foundation for much of the research conducted over the last three decades on the distribution and character of the global operations of multinational corporations. More indirectly, the deeper questions raised by Dunning’s work, as well as the criticisms leveled at it, have spawned an ever widening array of research thought. The continuing importance of this work can be seen in the fact that, today still, even the earliest work on the eclectic paradigm continues to be cited by scholars at a fairly steady rate (see Chandy & Williams, 1994; Phene & Guisinger, 1998).¹

According to John Dunning’s eclectic paradigm, firms need to have ownership, location, and internalization advantages in order to cross borders and engage in foreign direct investment. By drawing on historical evidence on the evolution of a group of leading marketing‐based multinationals in consumer goods, this paper claims that, despite its richness, the eclectic paradigm, and in particular the concept of “ownership advantages,” needs to be revised and extended to take into account different levels of institutional analysis. For the eclectic paradigm to give a rounded view of the internationalizing firm, it needs to acknowledge the critical importance of firm‐specific ownership advantages, such as the role of the entrepreneur.

This paper seeks to offer a model on the evolution of the multinational business enterprise (MBE). It is meant to be an alternative to the eclectic paradigm, the preeminent theoretical tool applied in studies of the multinational enterprise (MNE) and foreign direct investment. The label MBE aims at moving focus from structure of production to change processes in business relations and entrepreneurship.

While the eclectic paradigm is grounded in neo-classical economics meant primarily to be applied in studies of macroeconomic interest and is based on assumptions not applicable in studies of individual firms, the model of the MBE is meant to be used in studies at the micro-level. It is rooted in assumptions consistent with behavioural theory consequently being more realistic. The model is based on the Uppsala model with input from studies on dynamic capabilities, entrepreneurship research and research on management under uncertainty.

The realistic assumptions of the model imply that it is relevant for understanding the dynamics of strategy and management of the MBE.

As the model aims at enriching our understanding of the dynamics of the MBE the paper recommends empirical longitudinal studies of firms.

Realistic and relevant assumptions imply that the model differs in critical respects from received theory in international business.

This paper proposes a new typology of Ownership (O) advantages as a function of their differential managerial implications in established multinational enterprises (MNEs). We argue that the mainstream typology of O advantages proposed in Dunning’s eclectic paradigm does not recognize the uniqueness of individual firms. We therefore propose a new typology of O advantages, which distinguishes among four types, based on the geographic source of such advantages and their transferability across borders. Moreover, we acknowledge the importance of resource recombination advantages. Two case examples illustrate the implications of the new typology for established MNEs.

The main purposes of this paper are to perform a micro‐ and macro‐dimensional analysis, and to apply the theory of eclectic firm to understand the investment dimension in the apparel retail environment in India.

A micro and micro analysis of the retail industry in India was conducted. Eclectic firm theory was then applied to the analysis to understand the apparel retail environment in India.

The key findings of the study are that foreign retailers looking to successfully capitalize on India's impressive growth need to understand several driving attributes such as strong and distinct culture, population distribution, and local conditions, and risks that are indeed unique to India.

This report makes a contribution towards a comprehensive understanding of the Indian apparel retail market. It is desirable for foreign retailers to acquire such knowledge in order to devise suitable strategies to enter and compete in the Indian marketplace. In addition, this study provides researchers to undertake more in‐depth analysis of the market to explore the different facets of the attractive yet complex Indian environment.

This research has two major purposes: developing and testing a resource‐based framework for entry mode choice and ascertaining the extent to which the determinants of foreign market entry mode choice in the manufacturing sector apply to foreign market entry mode choice in the non‐separable service sector. Using mail survey data collected from top‐level managers of US firms that had been engaged in international business, the article tests a number of research hypotheses concerning foreign market entry mode choice in the manufacturing and service sectors. The managerial and research implications of the findings are delineated and directions for future research are offered.

The internationalization of service firms is expanding dramatically, fueled by recent technological innovations and reductions of trade barriers. Drawing upon Dunning’s eclectic theory, firm‐ and location‐specific factors which have been found to be antecedents of internationalization of manufacturing firms are extended to determine their applicability to the internationalization of service firms. The hypotheses are empirically examined through a survey of 228 business‐to‐business service firms. Findings indicate that the firm‐specific factor of firm size and the location‐specific factor of market characteristics influence management attitudes toward operating internationally, which in turn influence the degree of internationalization of service firms. Practical implications, drawn from the results, are offered for managers of service firms who are facing the task of internationalizing.