Strategic view of internationalization process, a case study

This study aims at examining the Slovenian airdrome multinational corporation construction Company, in OLI paradigm factors, notably focusing on how the OLI paradigm can be utilized to explain the course of the company for the decision of internationalization production. The major outcome of this study demonstrates that among the OLI paradigm, ownership and location advantages can best explain the Company’s internationalization of production as the Company has the monopolistic advantage in production airdrome in Balkans, at old Soviets countries, and the Middle East and those regions present locational advantage because of their effective demand capacity, low labor costs, free entry markets.

The survival of the fittest in the global markets: multinational corporation challenge, evolution and decline

PurposeThe purpose of this perspective paper is to answer the question of why some multinational corporations (MNCs) do not evolve and fail to avoid retrogression by natural selection in international business (IB) and to introduce eight papers selected for this special issue.Design/methodology/approachThe authors conceptually discuss the reasons for MNC failure by illustrating key motivations behind foreign direct investment (FDI) undertaken by MNCs based on internalization theory, the OLI paradigm and the OILL (i.e. OLI plus the learning motivation) paradigm. Then, the authors develop an evolutionary perspective to explore the survival of the fittest in the global markets and the natural selection of MNCs.FindingsThe eight papers selected for this special issue expand the authors’ understanding of globalized organizations' challenges, evolution and decline as well as offering a distinct opportunity to reconsider diverse extant theories about MNCs by suggesting an extension that accounts for the rise of various globalized organizations particularly in and from emerging markets.Originality/valueDespite increased numbers of MNCs, which struggle to survive and are faced with great risk of failure, the authors’ understanding of them still remains in infancy. While scholars have investigated diverse topics related to MNCs, existing studies have developed theories predominantly emphasizing MNC success. Thus, conventional theories in IB such as internalization theory and the OLI paradigm may not be sufficiently applicable to explain the phenomenon of MNC failure (i.e. MNC decline). Based on authors’ discussions, the authors believe this is an appropriate time to refine mainstream IB theories by concurrently considering both evolution and retrogression.

The OLI Paradigm as a comprehensive model of FDI determinants: a sub-national approach

PurposeThis study aims to advance a sub-national perspective within the OLI Paradigm by analyzing how and to what extent the Eclectic Paradigm can serve as a general model to capture region-specific aspects of the location determinants of FDI, encompassing institutional effects that extend beyond the quality of institutions.Design/methodology/approachThe authors conducted a systematic literature review of 41 selected papers published between 1990 and 2019. Using inductive content analysis, they investigated the theoretical choices used to support analyses of the effects of institutional factors on MNEs' location decisions at the sub-national level.FindingsIt was found that, when changing from the national to the sub-national level of analysis, there is no need to change the main assumptions used in the literature, although a different perspective must be adopted. The Eclectic Paradigm permeates most of the studies revised and can serve as a general model to capture the sub-national perspective. It offers a foundation for new perspectives on the dynamics of institutional and political factors and their effects on location strategies and determinants at the sub-national level. Adopting the OLI Paradigm with a sub-national approach could widen the IB literature's prevailing focus on traditional economic factors and institutional quality.Research limitations/implicationsThe authors contribute to extant International Business literature Their paper enhances the literature on FDI location determinants by providing a more specific approach to development of a sub-national perspective within the OLI Paradigm, extending the institutional effects to capture more region-specific factors influencing the location of FDI. Study limitations are related to our analytical focus on the location dimension, excluding motives for FDI or firm-level location strategies. Rather than limiting analysis to quantitative studies, future research that includes qualitative studies and also covers the other dimensions of the OLI Paradigm could open additional new research avenues for advancing the sub-national perspective within the field of IB.Practical implicationsThe authors’ main findings suggest that MNEs' location strategies should include a sub-national perspective, which means that firms need to assess different levels of the location and understand their interaction with nationwide constraints and limitations, as it may affect firms' ability to effectively conduct their value-adding activities. They also contribute elements that can support sub-national governments' actions and policies aiming to enhance locational advantages to attract and retain FDI.Originality/valueThis review specifically analyzes the location determinants of FDI at the sub-national level, in studies published in a broad set of journals, from a variety of fields, prioritizing articles that investigate sub-national institutional determinants. The authors derive implications for the International Business literature and propose that the sub-national dimension should be incorporated into the Eclectic paradigm in order to better understand the influence of institutional sub-national determinants.

Motivations for Outward FDI from Emerging Economies to Advanced Economies: A Literature Review

Outward Foreign Direct Investment (FDI) from emerging economies in recent years has experienced rapid growth, especially from the BRIC (Brazil, Russia, India, and China) economies. This has gained much attention from international business researchers. The present study assessed the motivations for the outward FDI from emerging economies to advanced economies based on literature review. The paper revealed that market seeking, natural resource seeking, strategic asset seeking, efficiency seeking, and home government support motivate firms from emerging economies to invest in advanced economies. However, efficiency seeking least motivates China’s outward FDI due to its low labour cost. The study also made an evaluation of the existing theories of FDI to determine whether they adequately explain such investments. Based on the evaluation, the OLI Paradigm and the ResourceBased View do not adequately provide a plausible explanation for such investments. However, emerging economies outward FDI to advanced economies seemed to be adequately explained by the Institutional Theory.

New institutional economics: contributions to international business studies

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.

FACTORS INFLUENCING INDIAN FIRMS DECISION MAKING IN FOREIGN DIRECT INVESTMENT IN AFRICA

India’s economic progress and relations with other developing regions have received much attention, particularly the way in which Indo-African relations have evolved since 2000. This paper aims to put Indian FDI in Africa into perspective and provide some answers on the nature and possible impact of these flows to the continent. The study utilized the international typology offered by Dunning OLI paradigm to identify the important of Location Specific Advantages and how these advantages leads to selection of location for investment purposes by investors The study findings demonstrated that potential market growth, market opportunities and consumer base are the important indicated Indian firms targets Africa to seek new and unexplored markets of Africa. Competitiveness climate is important determinant along with economies of scale, investment incentives and availability of natural resources.

The effects of conventional and unconventional FDI on the host country

Purpose The purpose of this paper is to analyze and compare the effects of conventional and unconventional FDI on the host country in a more comprehensive and systematic way. Design/methodology/approach Both the OLI paradigm and the imbalance theory are linked to the diamond model in order to compare the effects of conventional and unconventional FDI on the host country. This methodology is then applied to the real world as a case study, FDI toward the Korean automobile industry. Findings Conventional FDI is often said to be more beneficial to the host country than the unconventional type. However, the actual effect of unconventional FDI is shown to be more positive with better management and is often larger than perceived. Therefore, unconventional FDI emerges as important as conventional FDI for sustainable economic development. Practical implications In general, unconventional FDI has often been criticized severely because of misperceptions derived from the dominance of conventional FDI on theoretical aspects, incomprehensive perspectives toward assessing the effects of FDI, and negative political views. Therefore, rigorous and holistic case study analyses based on solid analytical tools are needed in order to better understand the effects of unconventional FDI and to draw up effective and proper FDI promotion policies. Originality/value This paper provides a way to better understand the effect of unconventional FDI on the host country comprehensively and systematically by expanding and deepening existing theories. Based on this, the effects of conventional and unconventional FDI on the host country are compared theoretically and empirically, particularly with the case of the Korean automobile industry.

Cross-cultural Adaptation Index of Chinese Expatriates in Malaysia: Extended Location-Specific Advantages

Objective - In the fast changing globalizing and liberalizing world, the concern is not only on the location-specific advantages of a host country but also on how multinational enterprises manage to survive ex-post entry in a different environment. The cultural distance between the home and host countries thus plays an important role in this context. Empirical studies have shown that cultural distance and cross-cultural adaptation are interrelated, and there is a moderating role played by cultural distance on the cross-cultural adaptation. The cross-cultural adaptation is thus an important dimension to be considered in order to extend the L-advantages. Many studies have been conducted to build a cultural distance scale. Yet only a few studies have been conducted to construct a cross-cultural adaptation scale. This study thus aims to build a cross-cultural adaptation index. Methodology/Technique - The index is built based on the data collected from Chinese expatriates through in-depth interviews and questionnaire surveys. Findings - Two simple cross-cultural adaptation scales were built. These are the Simple Sociocultural Adaptation Scale (SSAS) and Psychological Adaptation Scale (SPAS) with seven pillars. An average index score was computed for each pillar. Living (78.79), interaction (69.19), regulative (64.02), work (85.61), psychological well-being (68.33), satisfaction (63.64), and intention to stay (62.12). The sociocultural adaptation index scored 76.57, while the psychological adaptation index scored 65.91. Novelty - This study provides insights for better understanding of Malaysian cultural environment to investors, expatriates, and policymakers as well as to extend and enrich the OLI paradigm. Type of Paper: Empirical Keywords: Extended location-specific advantages; Cross-cultural adaptation index; Sociocultural adaptation; Psychological adaption; OLI paradigm. JEL Classification: F21, G14, Z13.