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1 – 10 of 897Lorraine Eden and Li Dai
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…
Abstract
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
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Bernardo Frossard Silva-Rêgo and Ariane Roder Figueira
The purpose of this paper is to analyze the main contributions of the new institutional economics to the international business (IB) arena. It also intends to show how the NIE is…
Abstract
Purpose
The purpose of this paper is to analyze the main contributions of the new institutional economics to the international business (IB) arena. It also intends to show how the NIE is being incorporated to both eclectic paradigm and Uppsala school’s view, and how it is modifying them.
Design/methodology/approach
A range of IB articles, which contained an institutional view and also discussed the eclectic paradigm or the Uppsala school, provides the background to build a framework.
Findings
This paper proposes a framework showing the impact of the institutional variables on the internationalization of firms, by addressing both the OLI paradigm and Uppsala school. It also concludes that the institutional theory has been a point of intersection between the OLI paradigm and Uppsala school, since both have been renewed to understand the transaction costs borne by the firms in their international learning process and in the search for less asymmetrical information.
Research limitations/implications
This paper provided a brief discussion about the institutional components.
Practical implications
This study is a useful source of information for those who want to discuss the institutional impact in the IB arena and emerging markets.
Originality/value
This paper summarizes how the OLI paradigm and Uppsala school encompassed the institutional variables. It also presents a framework that allows new study possibilities since the understanding of the influence of institutional variables on the international movements of firms is still cloudy.
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Jason Li‐Ying, Tamara Stucchi, Anne Visholm and Joanna Solvig Jansen
The purpose of this paper is to explain in detail the strategic asset‐seeking OFDIs of Chinese firms in Denmark through a theoretical lens that combines the updated OLI…
Abstract
Purpose
The purpose of this paper is to explain in detail the strategic asset‐seeking OFDIs of Chinese firms in Denmark through a theoretical lens that combines the updated OLI (Ownership, Location, Internalization) paradigm and the internalization theory. Meanwhile, the authors hope to unveil the unique characteristics of firm specific advantages (FSAs, including O and I advantages) and country specific advantages (CSAs, including L advantages).
Design/methodology/approach
The authors chose two case firms that just started investing and a third one that was in the process of preparing investment in Denmark. Primary data were collected by semi‐structured interviews in English at various locations in late 2009 and early 2010. The three Chinese firms in this study share a common primary objective in their strategic orientation of OFDIs. That is to seek strategic assets that are complementary and critical to augment their existing FSAs.
Findings
Rugman stated that strategic asset‐seeking OFDIs are supposed to have high levels of FSAs and CSAs. This study presents a more detailed analysis regarding the O, L and I advantages that Chinese investing firms in Denmark are perceived to possess. It was found that these Chinese investing firms had high levels of Oa and Oi but Ot was largely absent; furthermore, although Lr was obviously appreciated in Denmark, Li presented a mixed picture. The paper also found that internalization advantages were only able to be realized when investing firms were good at utilizing networking and guanxi, which were largely derived from their prior Oi advantages.
Originality/value
Few have analyzed strategic asset‐seeking OFDIs made by emerging markets based on the FSA/CSA matrix that combines the OLI paradigm and the internalization theory. This study pursued this research endeavor by enriching a refined framework that connects the OLI paradigm, which recognizes multiple dimensions of O advantages and an institutional perspective, to the internalization theory, which converts O and I advantages into FSAs and associates L advantages with CSAs.
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The purpose of this paper is to show that existing theories, principally Dunning’s OLI model, Mathews LLL model and Rugman’s version of internalization theory are unable to…
Abstract
Purpose
The purpose of this paper is to show that existing theories, principally Dunning’s OLI model, Mathews LLL model and Rugman’s version of internalization theory are unable to explain the rise of emerging market multinationals (EMNEs). The reason is that they over-emphasize the strategic importance of intangibles and ignore that of complementary local assets. Taking complementary local assets into account makes it possible to understand why EMNEs are able to finance their intangible-buying sprees and, often with the help of their governments, to swap market access for technology.
Design/methodology/approach
This is a conceptual paper based on the bundling model (JIBS 2009) and backed by the case histories of four EMNEs.
Findings
The author shows that EMNEs have much better prospects vis-à-vis established MNEs than generally thought in Western Europe and the USA and that they will become serious competitors.
Originality/value
This is, as far as the author knows, the first explanation of why EMNEs have the bargaining power and the resources necessary to swap or buy technology from established MNEs.
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Jongmoo Jay Choi and Eric C. Tsai
Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial…
Abstract
Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial factors are also important in corporate FDI decisions. The financial factors concern internal capital market strength and corporate governance and include exchange rate changes, internal and external financing cost, risk diversification, and agency costs. There is variability in the significance of financial variables depending on industries and destinations. The integrated model with both strategic and financial factors is superior to either component model in explaining FDIs. However, financial factors are no less important in explaining the prevailing FDI phenomena than strategic or operational variables.
Ajai Gaur and Vikas Kumar
Research on internationalization of emerging market firms (EMFs) has received an increasing attention in the international management field. A central argument in a majority of…
Abstract
Research on internationalization of emerging market firms (EMFs) has received an increasing attention in the international management field. A central argument in a majority of these studies is that the internationalization of EMFs is different from that of firms from developed economies, and existing internationalization theories are insufficient to fully explain this new phenomenon. We conduct a critical review of important studies on the internationalization of EMFs to address two related questions. First, is the internationalization of EMFs really a new phenomenon, never been witnessed in the past? Second, does it warrant new theoretical developments? Our review suggests that there are important variations in the internationalization strategies of EMFs and developed economy firms, within EMFs from different emerging economies, and during different time periods. A thorough understanding of motivations, paths, processes, and performances of EMFs does require new theoretical approaches that can take into account the unique aspects of EMFs.
Ilan Alon, Indri Dwi Apriliyanti and Massiel Carolina Henríquez Parodi
This paper aims to provide a bibliometric meta-analysis of the already substantial and growing literature on international franchising. Franchising is a model for businesses to…
Abstract
Purpose
This paper aims to provide a bibliometric meta-analysis of the already substantial and growing literature on international franchising. Franchising is a model for businesses to achieve scale with limited resources. International franchising is a mode of entry that allows firms to develop new markets with relatively little risk but also little control.
Design/methodology/approach
Using a systematic approach, the paper identifies all articles in the ISI Web of Science from 1970 to 2018 that includes the term international franchising (in the title, the abstract or keywords) and finds 131 articles. This paper used HistCite software to analyze the bibliometric data.
Findings
Four major research clusters in the international franchising literature are identified. In addition, this study shows a change in research patterns regarding topics, theories and methodologies from the 1970s through 2018. The paper presents the most influential articles, authors and journals.
Originality/value
From the analyzes, this study develops a conceptual framework of international franchising and suggest avenues for future research.
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The theory of monopoly price was originally formulated by Carl Menger at the inception of the marginalist revolution in 1871 and represented the dominant theoretical approach to…
Abstract
The theory of monopoly price was originally formulated by Carl Menger at the inception of the marginalist revolution in 1871 and represented the dominant theoretical approach to monopoly until the 1930s. Despite its impeccable doctrinal pedigree and lengthy dominance, the theory abruptly disappeared from the mainstream neoclassical literature after the Monopolistic Competition Revolution, to be revived and reformulated after World War II by Ludwig von Mises. The present paper describes the theory as it was offered in its most sophisticated pre‐war form by American economist Vernon A. Mund, who published an unjustifiably neglected volume on monopoly theory that appeared in the same year as the classic works by Joan Robinson and Edward Chamberlain. This paper then attempts to draw out the critical implications of Mund’s formulation of the theory for the current neoclassical orthodoxy in monopoly and competition theory, including the elasticity of demand curves facing individual producers under competition, the time perspectives that are most relevant in analyzing the pricing process, the proper role of long‐run equilibrium in this analysis, and the misapplication of the marginal revenue and marginal cost concepts. Finally, the paper suggests a number of reasons why the theory was swept aside in the aftermath of the Chamberlain/Robinson Revolution with almost no resistance from its most prominent exponents.
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Shaowei He, Zaheer Khan, Yong Kyu Lew and Grahame Fallon
The purpose of this paper is to examine how innovation-related firm-specific ownership advantage (FSA) plays a role in developing the competitive advantage of Chinese…
Abstract
Purpose
The purpose of this paper is to examine how innovation-related firm-specific ownership advantage (FSA) plays a role in developing the competitive advantage of Chinese multinationals when they internationalize.
Design/methodology/approach
Based on a review of the existing literature concerning foreign direct investment by emerging economy multinational enterprises (EMNEs), the authors identify that numerous studies explain this phenomenon on the basis of their location-bound country-specific advantages. However, such views do not fully explain the key underlying factors behind the rapid rise and success of many EMNEs as these firms rapidly internationalize and develop global competitiveness in developed markets. The current research explores three leading innovative Chinese EMNEs from the engineering sector: BYD, Sany Heavy Industry and CSR China.
Findings
The authors find that EMNEs’ knowledge, and particularly their innovation-creating technological knowledge, has contributed greatly to their successful internationalization. The illustrative cases show that the three firms have now moved beyond the infant to the mature stage of EMNE development through developing their technological knowledge in order to realize FSA through internationalization. This study helps in contributing fresh reflections to the continuing debate concerning the causes of internationalization and global competitive development by EMNEs and the role of their FSAs in these processes.
Originality/value
This is one of the few studies which have demonstrated that some of the EMNEs do possess firms’ specific advantage which helps explain their innovative capabilities, competitive advantages and subsequent internationalization patterns.
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Liping Li, Chuan Chen, Igor Martek and Guanghua Li
Given their interrelationship, international market selection (IMS) and entry mode selection (EMS) must be considered jointly if an optimal entry strategy is to be realized…
Abstract
Purpose
Given their interrelationship, international market selection (IMS) and entry mode selection (EMS) must be considered jointly if an optimal entry strategy is to be realized. However, researchers in the field of international construction have the tendency to consider IMS and EMS independently or sequentially. Therefore, this paper aims to explore a holistic framework that can accommodate IMS and EMS concurrently and test it using empirical data.
Design/methodology/approach
his study includes theoretical and empirical research. In theoretical part, an integrated decision model of IMS and EMS is proposed adopting literature review and theoretical derivation, then hypotheses are developed for the impact of decision-making factors. In the latter part, the IMS and EMS of 54 Chinese contractors in 67 countries were investigated, empirical data are collected according to hypotheses, an ordinal logistic regression model is established for statistics analysis. Finally, findings are drawn by comparing literature-based hypotheses with data-based analysis results.
Findings
Results show that empirical data fit theoretical model well. Findings are: IMS and EMS can be integrated into a holistic decision-making framework when be properly sequenced. When IMS and EMS are determined simultaneously, the decision can benefit from a sharing of common information. And the roles of at least 13 common factors are empirically demonstrated in this study.
Research limitations/implications
The integrated decision sequence proposed in this study is applicable for a specific market, and cannot compare multiple alternative markets directly. The decision-making factors identified in this paper do not cover the enterprise strategic objectives and some other factors. Empirical data and some theoretical assumptions are based on the international market entry strategy of Chinese contractors. Therefore, the conclusions may not be completely applicable to global contractors though have certain reference value.
Originality/value
Based on the idea of holistic decision-making of IMS and EMS, this study proposes an international market entry strategy (IMES) sequence and an explicit model for determinants, then tests them with empirical data. This paper provides a new idea to manage IMS and EMS concurrently, which can improve the efficiency of IMES decision-making and avoid missing optimal alternatives. This study paves the way for a practical model and provides reference for contractors' international market entry strategy.
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