Author Question: According to Dunning's eclectic paradigm, an MNE must meet three conditions before successfully ... (Read 52 times)

Garrulous · **on:** Jul 7, 2018

According to Dunning's eclectic paradigm, an MNE must meet three conditions before successfully entering a foreign market via foreign direct investment (FDI). Explain these conditions in a short essay.

What will be an ideal response?

Question 2

One way of minimizing dysfunctional organizational politics is to use systematic and transparent decision-making processes.

a. True
b. False

coyin · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

a. The MNE must possess ownership-specific advantages relative to other firms in the marketthat is, knowledge, skills, capabilities, key relationships, and other assets that allow it to compete effectively in foreign markets. These assets amount to the firm's competitive advantages. The notion of ownership-specific advantages is related to monopolistic advantage theory.

b. The firm must have access to location-specific advantages, the comparative advantages available in individual foreign countries, such as natural resources, skilled labor, low-cost labor, and inexpensive capital.

c. The MNE must have internalization advantages, benefits it derives from internalizing foreign-based manufacturing, distribution, or other stages in its value chain. When profitable, the firm will transfer its ownership-specific advantages across national borders within its own organization rather than dissipating them to independent, foreign entities, such as distributors and other autonomous intermediaries abroad.

Answer to Question 2

a