Eclectic Theory and Foreign Direct Investment in Nigeria: A Contextual Overview

Foreign direct investment (FDI) is an integral and indispensable source of foreign capital for both the developed and developing countries aside its catalytic economic growth accompanying it. Hence, the competition to court more to maximizing its positives by countries is intensified in the contemporary world and eclectic theory offers significant insights on the tripartite and interrelated platforms of ownership, location, and internalization advantages to the appropriation of FDI to an economy. Therefore, this article main objective is to examine Nigeria’s experience in this regard. The case study research method is adopted to carry out a contextual assessment of Nigeria’s FDI position within the eclectic theory framework using secondary data sources. The findings reveal that Nigeria’s location advantages are not too conducive for FDI attraction and optimum exploitation of the internalization advantages by firms which consequently deprived the country of its benefits of export-driven economy objective and employment generation amongst others. The study recommends diversification of her economy and recalibration of the country’s political, economic and policy environment to enable positive predictability, FDI attraction, and its inherent returns appropriation.

Effects of R&D Investments and Market Signals on International Acquisitions: Evidence from IPO Firms

We investigate how intangible assets in the form of R&D influence firms’ hazards of engaging in international acquisitions. On the one hand, previous research has noted that the tacit and redeployable nature of R&D investments may prompt firms to expand their operations overseas and create value from international acquisitions. On the other hand, it is difficult for other firms to evaluate the quality and prospects of an acquirer’s intangible resources, thereby hampering its ability to finance and execute international M&A deals. In the context of international acquisitions undertaken by firms just completing their initial public offerings (IPOs), we argue and find that the IPO firm’s engagement in post-IPO international acquisition activity is generally negatively related to its R&D intensity. This effect contrasts previous arguments on the internalization advantages possessed by R&D-intensive firms. We also argue that firms able to convey their resources and prospects through such signals as previous international alliances and foreign sales can mitigate information problems presented by their intangibles, and thus carry out and benefit from cross-border acquisitions. We therefore identify an unexamined tradeoff that R&D investments present in the international M&A context and discuss how international signals can facilitate cross-border transactions subject to various market frictions.

Sourcing Strategies of Firms

The purpose of the chapter is to present recent theoretical developments in FDI theories with an emphasis on sourcing strategies of firms. It is stated that economic theory explains the existence of the so called vertical FDI as the result of market failures or transaction costs and incomplete contracts. Firms engage in foreign sourcing due to lower costs or an access to unique resources but that sourcing takes place within firms' boundaries in order to benefit from internalization advantages. Although recent theories have been developed in the context of FDI from developed countries, those new insights can be easily applied to the case of outward FDI from emerging economies as well.

Eclectic Paradigm and the analysis of FDI in tourism in Nepal

This paper analyzes the factors that determine the inflows of FDI in tourism sector of Nepal using Eclectic Theory (Paradigm) propounded by John Dunning. It was observed that the first and second conditions (ownership specific advantages and internalization advantages) are firm specific determinants of FDI, whereas, the third is location-specific and, therefore, has a crucial influence on the host country Nepal’s inflows of FDI in tourism. It was further observed that the development impact of FDI on the tourism industry of Nepal may be determined by various combinations of three main important factors – policy environment, including policy reforms that trigger further inflows of FDI; the level of development (and maturity) of the tourism industry; and, the geography of Nepal. The paper suggests that MNC’s can help Nepal by, among other things, diversifying the supply of tourism products and improving the local service standards.The Gaze: Journal of Tourism and Hospitality Vol.5 2013 pp.69-82

Factors that influence business strategies of direct foreign investments in emerging countries

The purpose in this article is to propose an analytical model of the factors that influence business strategies of direct foreign investment in emerging markets. To this end, a literature review was conducted to identify the factors considered relevant to business investment in developing economies. The analytical model was developed on the basis of this review. This model includes external factors (driving mechanisms) and internal factors (leveraging mechanisms). Two dimensions of external factors were identified: macroenvironmental (localization advantages) and micro environmental (internalization advantages). The third dimension, internal factors, is composed of characteristics of the investing firms themselves (proprietary advantages). This model can be applied to the analysis of industries as a whole or to specific industrial segments, in terms of their attractiveness to foreign direct investment.

Effects of Ownership and Internalization Advantages on Performance: The Case of Japanese Subsidiaries in the United States and Latin America

This paper attempts to prove empirically that ownership and internalization advantages play a more important role than entry mode in explaining the attained performance of subsidiary companies. While a direct effect of ownership and internalization advantages on performance was found, a relation between entry mode and performance is not evident. A logistic regression model is applied to two samples, i.e., two states in the United States and countries of Latin America.