Dunning Eclectic Paradigm

Dunning suggests that FDI will occur when there is an ownership advantage, a location advantage, and an internalization advantage.

• True

• False

Which of the following is a condition of Dunning's eclectic theory?

• The firm must own a competitive advantage that overcomes competing against foreign firms in their markets.

• Research and development costs must outweigh expenses related to foreign direct investment.

• The firm must benefit more from outsourcing a service than controlling a foreign business.

• Business activity must be more profitable in a domestic location than in a foreign location.

Which of the following is an example of ownership advantage owned by a company?

• political advantage

• reliable supplier

• proprietary technology

• quality natural resources

The Eclectic Paradigm, also known as the OLI framework, was developed by economist John Dunning to explain the reasons behind foreign direct investment (FDI).

• TRUE

• FALSE

According to the Eclectic Paradigm, the "O" in the OLI framework stands for "Ownership advantages," which refers to the unique assets or capabilities a firm possesses.

• TRUE

• FALSE

The "L" in the OLI framework refers to "Location advantages," which highlight the benefits a firm gains from operating in a specific geographic area.

• TRUE

• FALSE

The "I" in the OLI framework refers to "Integration advantages," which describe the efficiencies gained by a firm from integrating different operations within its global supply chain.

• TRUE

• FALSE

Dunning's Eclectic Paradigm suggests that a firm will engage in foreign direct investment only if it possesses Ownership, Location, and Internalization advantages.

• TRUE

• FALSE