In addition to its contribution as a synthesizing framework the OLI par

In addition to its contribution as a synthesizing

This preview shows page 8 - 11 out of 33 pages.

In addition to its contribution as a synthesizing framework, the OLI par identifying the key location advantages of four types of international produc resource seeking, market seeking, efficiency seeking, and strategic asset se ning 1998). In contrast to the Hymer - Kindleberger - Caves approach, Dun This content downloaded from 37.131.52.52 on Sun, 22 Sep 2019 16:12:01 UTC All use subject to
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762 A. M. Rugman et al. some attention to manageria complex trade-offs to be ma countries and assessing the b ers in geographically dispers Dunning's eclectic paradigm interactions. From the firm in managerial decision makin nant consideration. The exist needed to be internalized in recombination and profita context, Itaki (1991) has voic claimed that an (O) advantag case it would be redundant t has further pointed out the He argues that the (O) advan inseparable from - location Despite the above shortcomi Dunning's eclectic paradigm to explain foreign entry mo In parallel with the develop researchers, including schol 1977) and the Helsinki Schoo to explain the process by wh navian countries, internation Drawing upon the classic w Scandinavian model proposes process whereby a firm's int national experience and kn and Vahlne 1977, 1990). Inte international experience, typ establish a sales subsidiary a force of this internationaliz and Vahlne 1990). Johanson and Vahlne (1977) distance refers to the degree eign market (Johanson and firms undertake internationa alization model postulates tha are relatively familiar (i.e. ge then, capitalizing on the kno markets, successively progre (Johanson and Wiedersheim ies have indeed shown that t selection of a market entry (1994). This content downloaded from 37.131.52.52 on Sun, 22 Sep 2019 16:12:01 UTC All use subject to
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Fifty Years of International Business Theory and Beyond 763 However, internationalization theory can be better aligned with the arguments nalization theory. Rugman (1980a), and Fina and Rugman (1996) have pointed o an MNE engages in foreign production in order to avoid dissipation of the rent from its FSAs that were created at considerable effort and costs. Therefore, in tion theory suggests that a firm consider explicitly the relative costs of servicin markets by first, exporting to foreign markets with the FSAs embodied in fina second, engaging in FDI or third, licensing a foreign producer. This last optio attractive especially when the technology licensed is not any longer the techn which the firm's survival and future growth depends. The mode of entry changes over time as the relative costs and benefits associ each of these strategies change. The above stages in serving foreign markets are reverse of the internationalization stages, or the Aharoni (1966) approach, wh licensing as the first step, (2) exporting, (3) establishment of local warehouse local sales, (4) local assembly and packaging, (5) formation of joint venture, (6 direct investment (that is, full scale local production and marketing by a who subsidiary). Furthermore, Rugman (2005) also questions internationalization th
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