A Critical Review Against Dunning's Eclectic Theory

5612 words - 22 pages

INTRODUCTIONIt is true of everything that the first steps ate both the most important and the most difficult. To begin with, theorization consists of a set of definitions of concepts. The basic concepts underlying the eclectic theory of the multinational enterprise (MNE)(1) are currently being criticized by the internalization theorists(2) in that the 'ownership advantage' is 'double counting,' that is, the internalization and location factors are necessary and sufficient to explain the existence and growth of the MNE. The controversy seems to require a thorough examination of the concept of the 'ownership advantage'. However, the examination should extend further afield. Our objective in this paper is to assess critically the three basic concepts in the eclectic theory, i.e., the 'ownership advantage,' the 'internalization advantage,' and the 'location advantage' and to suggest the beginnings of an alternative framework to deal with the MNE and FDI (i.e., foreign direct investment).REDUNDANCY OF THE 'OWNERSHIP ADVANTAGE'Some Features of the Electic TheoryFirst of all, we must set up the target of our examination. The eclectic theory, Mark I, as advocated by Dunning is as follows [Dunning 1981:79]:1. It (i.e., the firm) possesses net ownership advantages vis-a-vis firms of other nationalities in serving particular markets. These ownership advantages largely take the form of the possession of intangible assets, that are, at least for a period of time, exclusive or specific to the firm possessing them.2. Assuming condition 1 is satisfied, it must be more beneficial to the enterprise possessing these advantages to use them itself rather than to sell or lease them to foreign firms, that is, for it to internalize its advantages through an extension of its own activities rather than externalize them through licensing and similar contracts with independent firms.3. Assuming conditions 1 and 2 are satisfied, it must be profitable for the enterprise to utilize these advantages in conjunction with at least some factor inputs (including natural resources) outside its home country; otherwise foreign markets would be served entirely by exports and domestic markets by domestic production.Four features of the eclectic theory should be noted here, as far as they are concerned with our argument. Firstly, needless to say, the concept of the advantage is a relative concept; i.e., advantage of a firm vis-a-vis the others tautologically means their disadvantage vis-a-vis the firm. The advantage is understood from the viewpoint of economic competitiveness and profitability, and thus it takes the form of an economic asset whether tangible or intangible. Thus, the asset value is measured by capitalizing the stream of expected future earnings by means of the rate of return. Secondly, the concept of internalization is interpreted as internalization of an 'ownership advantage' rather than that of an imperfect market.(3) Thirdly, the existence per se of the 'ownership...

Find Another Essay On A critical review against Dunning's Eclectic Theory

Postmodernism: Myths and Realities Essay

1985 words - 8 pages ? Do proponents and critics agree on anything? Characterizing Postmodernism Discussing postmodernism and continuing education, Leicester (2000) writes that "postmodernism is not a systematic theory or unified movement so much as a loose umbrella term for a perspective" incorporating reactions against "the sovereignty of science, the dominance of 'western traditions' and the assumption of epistemological progress" (p. 73). However, some

Critical Thinking Essay

1313 words - 5 pages students recognize that there is a relationship between their own immediate concerns and a certain instructional theory, higher standards of thinking become developed. Critical thinking is part of higher thinking (Kirby and Goodpaster, 1999). Student?s experiences can become legitimized through critical thinking. They are able to see that their experiences and their ideas are relevant. Working together as a group can achieve this goal. Class

Evolution Essays - Is There a Conspiracy to Suppress Creation Science?

591 words - 2 pages , conducted a computer search of 1,000 scientific and technical journals over a 3-year time period for articles having anything to do with creation scientists or their work. (2) Their search uncovered only 18 items, some of them critical of creation science, some news reports on the controversy, some letters to the editor. In other words, nothing that positively supported a scientific theory of creation.   Scott and Cole then surveyed 68

Teaching Philosophy as Education and Evaluation of Thinking

3188 words - 13 pages thinking (ALDRICH, 1948; BOSTWICK, 1959; DRESSEL & MAYHEW, 1954; MILLER & WESTON, 1949) The researchers stress the social motivation, the value of human person: the education of critical thinking could be a good defence against propaganda, advertisement and all the enemies of freedom and democracy (ANDERSON, MARCHAM, & DUNN, 1944; ELLIS, 1942; MARCHAM, ANDERSON, DUNN, & LUDLUM, 1941; SMITH, 1953) Others emphasise the critical evaluation in scientific

Methodological Eclecticism in Teaching English as a Foreign Language

4148 words - 17 pages Methodological Eclecticism in Teaching English as a Foreign Language "Eclectic", remarks Atkinson (1988, p. 42), "is one of the buzz words in TEFL at present, in part due to the realization that for the foreseeable future good language teaching is likely to continue to be based more on common sense, insights drawn from classroom experience, informed discussion among teachers, etc., than on any monolithic model of second language acquisition

Leadership in Today's Business World

2053 words - 8 pages Part 1) Introduction: In today's more rapidly changing world, leadership prevails everywhere. It is playing a more important role not only in our personal life but also in our professional life, because leadership has a great impact and influence on people. So, utilizing leadership adequately can bring us a piece of attractive picture. To use humanizing actions is a critical leadership skill, which will be discussed in the following

Project Management for Information Systems

3569 words - 14 pages expenses of time and money. This can be achieved by limiting the amount of systems implemented, involvement of business units, and amount of business process reengineering needed. Any proposed changes should be evaluated against business benefits and, as far as possible, implemented at a later phase (Sumner, 1999; Wee, 2000). The project must be formally defined in terms of its milestones (Holland et al., 1999). The critical paths of the project

Candide: a Heroic Diatribe of French Institutions

1575 words - 6 pages Leibniz's view was far more accepted than Voltaire's deism. The story of Candide is a humorous philosophical review of French society. Voltaire is quite explicit with his characters, as they relate to existent individuals, especially the character of Doctor Pangloss, who is the quintessential metaphysical optimist and a comical parody of real philosophers who followed the same doctrine. The extreme of this theory is when Pangloss stops Candide from

Education in Sport

965 words - 4 pages research tries to assess what changes occur as a result of participation in interscholastic athletes. Other approaches from a Marxist and critical theory perspective have challenged the underlying assumptions of 'equality' in society and how sport can help to perpetuate social class race and gender inequalities, and encourage practices such as dieting, drug taking and aggression which endanger physical and mental health. In particular, feminist research has revealed the way sport can reinforce patriarchy as the natural order of social relationship between male and females.

Corporate Interests and Their Impact on News Coverage

2328 words - 9 pages & Williamson. Bergman also added that while working for ABC news he discovered that it was against "ABC code" to do an enterprise story about a major advertiser or supplier or to do a critical story on the owner of an NFL team (p. 51). The second example directly showing how corporate interests impact news coverage took place in 1997. Jane Akre and Steve Wilson, award-winning investigative reporters for WTVT-13 in Tampa, Florida, were fired in

Architecture Set In Motion

1553 words - 6 pages 1. Bouffrand: Salon de la Princess, hotel de Soubise, Paris, France, begun 1730’s      Salon de la Princess, is a many sided cylindrical interior room and is part of the Rococo style that incorporates minimal architectural features and light airy decor, that develops into a profession of interior design. Rococo is the revolt against complicated Baroque that decorated the interior of Versailles, in revolt against the

Similar Essays

A Critical Review Of F. Scott Fitzgerald's The Great Gatsby

1615 words - 6 pages A Critical Review of F. Scott Fitzgerald's The Great Gatsby The Great Gatsby by F. Scott Fitzgerald is a universal and timeless literary masterpiece. Fitzgerald writes the novel during his time, about his time, and showing the bitter deterioration of his time. A combination of the 1920s high society lifestyle and the desperate attempts to reach its illusionary goals through wealth and power creates the essence behind The Great Gatsby

Greasy Lake, A Critical Review

736 words - 3 pages problem with being "bad" is the person on top always has someone wanting to knock him/her off his or her thrown. T.C. Boyle painted the picture nicely, "able to manage a ford with lousy shocks over a rutted and gutted blacktop road at 85 while rolling a joint." This clearly paints a picture of the three characters as not being part of the choir group. In T.C's statement "Digby wore a gold star in his right ear" gives us the rebellion youth

Critical Review Of 'sex, Smallpox And Seraglios: A Monument To Lady Montagu'

1581 words - 6 pages from a savage land, they would only care that it would save lives. This is the major restriction that the article faces, due to the sources that Frith used. Frith's article shows a woman who went against the norms for women in society and was criticized for her contributions to the medical community because of these norms. The article shows the impact Montagu had on British society in the eighteenth century showed that our society has not

Postmodernism Essay

650 words - 3 pages validity of many historical documents. Critical analysis of the subject of modernism and post-modernism can be simplified in one statement: What is our understanding of certainty? The modern critical analysis form is an ideal philosophy of industrialism, an ideology that adopts the correspondence theory. Facts are unbiased descriptions of past events that assist one in gaining knowledge. Since facts have consequences, modernists believe