John dunnings eclectic model, introduced in 1976 dunning, 1977 and refined by him several times since then 1988, 1993, is a key contribution to the separation of international business studies ibs from international economics and trade theory and to the development of global strategy. The book was also conceived and written to record dunning s contribution to the creation of a doctoral program in international business at rutgers university at newark. Toward an eclectic theory of international production. The eclectic paradigm has been developed by john dunning in a series of publications dunning 1980, 1981, 1988, 1992. This paper updates some of the authors thinking on the eclectic paradigm of international production, and relates it to a number of mainstream, but contextspecific economic and business theories. The eclectic paradigm, also known as the oli model or oli framework is a theory in economics. Dunning s proposed model was preceded by stephen hymers 1960. Dunning s oli paradigm because the existing approaches e. An introduction to the eclectic paradigm as a metaframework for the crossdisciplinary analysis of international business. The cultural sensitivity of the eclectic paradigm by. This collection of original essays is designed to honour his work. John harry dunning wikimili, the free encyclopedia. In this theory, an attempt has been made to synthesize elements of. Critique of the internalization theory and eclectic paradigm.
John harry dunning obe 26 june 1927 29 january 2009 was a british economist and is widely recognised as the father of the field of international business. Dunnings eclectic paradigm offers a unifying framework for determining the. It is describes an improvement of dunning theory of internalization that was based on transaction cost theory. The eclectic paradigm or the eclectic theory as it was initially called of international production was first propounded by nobel laurate dunning in the symposium in stockholm in 1976. Btec level 3 national business student book 1 catherine richards, rob dransfield.
Dunning in 1979 ownership advantages specific advantages refer to the competitive advantages of the enterprises seeking to engage in. Positive impact of internationalisation to shanghai vision technology is limited during the first stage of international market expansion strategy due to the. The eclectic paradigm takes a holistic approach to examining entire relationships and interactions of the various components of a business. Various partial theories, for example those of macro resource allocation and organizational economics, are included in the analysis hence the term.
John dunning is one of the worlds leading scholars on the subject of multinational corporations and international business. Pdf rethinking the o in dunnings olieclectic paradigm. A variant of the eclectic paradigm linking direct and portfolio investment 3. Eclectic paradigm has been the strongest ever paradigm that offers a greater understanding of crossborder transaction and. The eclectic paradigm as an envelope for economic and business.
Dunning reading university, uk and rutgers university, usa abstract this paper updates some of the authors thinking on the eclectic paradigm of international production, and relates it to a number of mainstream, but contextspeci. Sep 14, 2016 dunning 1979 toward an eclectic theory of international production. Department of economics, university of reading, uk. Dunning in 1979 ownership advantages specific advantages refer to the competitive advantages of the enterprises seeking to engage in foreign direct investment. The book was also conceived and written to record dunnings contribution to the creation of a doctoral program in international business at rutgers university at. These are ownership o advantages, location l advantages, and internalization i advantages. Each book pulls together and synthesises dunning s writings from the previous period. Dunning acknowledges that, it is not possible to formulate a single operationally testable theory that can explain all forms of foreignowned production. In particular, it argues that, due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or oli, paradigm of. Dunnings 1977, cited in cantwell, 1992 oli eclectic paradigm model is the other most widely accepted theory of fdi, and this was intended as an antidote to the failings of internalisation theory. Btec level 3 national business student book 2 catherine richards, rob dransfield.
A major aim of this book on the eclectic paradigm is to enable scholars coming to. International journal of the economics of business, 8, 173190. There are three factors that determine the international activities of multinational enterprises mnes. These advantages may arise either from the firms privileged. The basic assumption of the eclectic paradigm is that the returns to fdi, and hence fdi itself, can be explained by a set of three factors. It is postulated, for example, that asset based ownership advantages oa are created by cultures that are individualistic. The eclectic paradigm, namely the oli paradigm was put together by the economist john henry dunning 19272009 in the late 1970s. Dunning university of reading and rutgers university abstract. The coverage explores a range of topics and seeks to build on the eclectic paradigm or to apply it to existing problems. Dunning indicates that, the research work undertaken. Dunning is currently seth boyden distinguished professor of international.
In particular, it argues that, due to the increasing porosity of the boundaries of firms, countries and markets, the eclectic, or oli, paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms. The paradigm is an outcome of his doctoral thesis in mid1950s. International entrepreneurship and the theory of the longlived international firm. In this article, dunning 1988 presented a restatement of and some possible extensions to the eclectic paradigm, while addressing various criticisms made of the eclectic paradigm.
In the 1980s, he published the eclectic paradigm or olimodelframework as further. He has written books and articles on development economics and in particular on the eecs economic relations with the third world, as well as a report and articles on transnational corporations in international tourism. The oli or eclectic approach to the study of foreign direct investment fdi was developed by john dunning. The oli framework the oli or eclectic approach to the study of foreign direct investment fdi was developed by john dunning. The eclectic paradigm the eclectic paradigm was first presented by john dunning in a lecture related to the nobel event in 1976. Even though several criticisms were addressed to the model, dunning, 1988b, 2001, the author he retained its overall structure and proposed an extension into what was coined as the investment development path idp model. It has proved an extremely fruitful way of thinking about multinational enterprises mnes and has. In this paper, we focus specifically on the o in the oli paradigm, tracing the history of dunnings ownership advantages. This paper first sets out the main features of the eclectic theory of international production and then seeks to evaluate its significance of ownership and location specific variables in explaining the industrial pattern and geographical distribution of the sales of u. The eclectic paradigm as developed and expanded by dunning 1977.
Chapter 3 presents the more mature version of the eclectic paradigm. He researched the economics of international direct investment and the multinational enterprise from the 1950s until his death. A core use of the eclectic paradigm is to determine the most appropriate form of market entry. Read a critical comparison of internationalisation theories. Value of eclectic paradigm in relation to international. The main reason for misalignment is that dunning is focused upon outward fdi into host economies. The essays explore many aspects of dunning s work, particularly his eclectic paradigm, which examines the interactions between ownership, location, and internationalization to explain foreign direct investment by multinational firms. The eclectic paradigm, like its near relative, internalization theory, avows that the. John dunning, who has died aged 81, was a pioneer of international business studies whose special interest lay in the effects of global capitalism. The eclectic paradigm as an envelope for economic and. The book has nine chapters including the introduction by cantwell. He has written several books and many articles on multinational enterprises and international direct investment. It is based on internalization theory and was first expounded upon in 1979 by the scholar john h. A theory of systemic adjustment and economic growth.
Nov 09, 2014 internationalisation advantages within dunning eclectic paradigm relates to cost advantages that are gained through organising operations within geographical boundaries of new markets. The eclectic paradigm as an envelope for economic and business theories of mne activity john h. He followed up on this presentation in numerous articles and books, refining and expanding the original contribution. 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. It is related to dunning s 1988 asset ownership advantages in the eclectic paradigm and selects firms that have chosen to commit resources across borders, thus becoming international. An introduction to the eclectic paradigm as a metaframework for. A century of foreign investment in the third world book.
Towards an eclectic theory of international production. For scholars and students in international business. The internationalization of chinese family enterprises and. This paper explores the extent to which the variables of the eclectic paradigm dunning, 1995 are affected by home and host country cultures. Eclectic paradigmoli paradigm explained with examples b2u. John dunning, 1st baron ashburton 17311783, english lawyer and politician. Theories and paradigms of international business activity gives particular prominence to the author s much renowned eclectic paradigm, which he first promulgated at a nobel symposium on the international allocation of economic activity in 1976. Reconciling internalization theory and the eclectic paradigm.
International business and the eclectic paradigm jstor. The essays explore many aspects of dunnings work, particularly his eclectic paradigm, which examines the interactions between ownership, location, and internationalization to explain foreign direct investment by multinational firms. It is accepted that, precisely because of its generality, the eclectic paradigm ha. Theories and paradigms of international business activity. Reappraising the eclectic paradigm in an age of alliance. For the first time, the eclectic paradigm of international production was publicly presented at the symposium international location of economic activity on the occasion of the awarding of the nobel prize in economics to b. To help to promote a greater conversation between those interested in the theoretical explanation of ib activities from various different backgrounds or starting points, this book offers a special collection of jibs articles which concern the foundations and the application of the eclectic paradigm. Dunning s objective was to develop a broad and encompassing view of the mne, while buckley and casson were more interested in developing a deep. Uppsala school by daniela margardt available from rakuten kobo. Rethinking the o in dunnings olieclectic paradigm emerald insight. The revised paradigm recognizes that international business activities can sometimes be organized more efficiently in cooperative interfirm networks and alliances, such. Department of economics, university of reading, whiteknights, reading rg6 2aa, berkshire, uksearch for more papers by this author. Dunnings investment development path for countries of the.
The eclectic paradigm as developed by dunning evolved in response to the changing ib milieu. I argue that this continual expansion threatens to make the paradigm tautological, without an honest. The eclectic paradigm, also known as the oli model or oli framework oli stands for ownership, location, and internalization, is a theory in economics. Root 1994 entry strategies for international markets. This article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of mne activity. The eclectic paradigm has been reformulated in recent years to account for the cooperative relationships embodied in alliance capitalism dunning, 2001. Within this context, the primary aim of this study is to test the impact of ownership and location advantages in determining the internalisation decisions by greek investors participating in the athens stock exchange ase, proving that dunning s eclectic paradigm oli is a holistic, yet context specific framework of analysing foreign direct. International diversification and the multinational enterprise, lexington books. The paradigm provides a strategy for operation expansion through fdi.
However, the costs of being a paradigm are reflected in dunnings efforts to. With theoretical expatiation of edith penroses growth of the firm, dunning oli framework approach of foreign direct investment fdi, this essay will also declare several issues may exist in an international business as well as factors should be considered in global supply chain. In fact, it is the most significant article in the book. Eclectic paradigm financial definition of eclectic paradigm. Seminar paper from the year 2007 in the subject business economics miscellaneous, grade. Jack dunning john angus dunning, 19031971, new zealand test cricketer. A critical comparison of internationalisation theories. The eclectic paradigm a framework for synthesizing and. Extending the eclectic paradigm in international business. Dunnings oli paradigm, resourcebased view strategic.
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