The theories discussed provide insights into international trade patterns.
No theory can fully explain the range of motives for international trade.
The theories, collectively, highlight key issues for international firms: facto
How MNEs Benefit from FDI
Ownership Advantages: the application of proprietary tangible and intangible assets in
the host country, such as:
Reputation, brand image, distribution channels.
Technological expertise, organizational skills, experience.
The MNEs Competitive Advantage
Generally has large capital, human, brand, and technological resource base , it
can leverage in many countries (e.g., McDonalds).
Has luxury of long time horizon for profits (e.g. China).
Global spread prov
The Growth of Service MNEs
There has been significant growth of MNEs in service areas, due to:
o Economic transformation developed nations shifting into service
economies & thus more service FDI.
o Globalization and liberalization of regulatory sys
FDI Terms to Know
Stock: Total accumulated value of foreign owned assets at a given point in
Flow: Amount of FDI over a period of time (one year).
Outflow: Amount of FDI go out of a country
Inflow: Amount of FDI entering a country
Moral courage enables managers to walk away from a decision that is
profitable, but unethical.
Moral courage gives an employee the strength to say no to a superior who
instructs her to pursue actions that are unethical.
Philosophical Approaches to Ethics: Utilitarian Ethics
Utilitarian ethics focuses on consequences. An ethical action should lead to the
best possible balance of good consequences over bad consequences. Yet, there
o It is often hard to
In 1977, (following Watergate, Lockheed and other events) the United States
passed the Foreign Corrupt Practices Act (the FCPA) to fight corruption. The
FCPA had many loopholes.
In 1997, the U.S. toughened the FCPA a bit and the Organiz
Ethics in International Business - Introduction to International Ethics
Business ethics are the accepted principles of right or wrong governing the
conduct of business people. Views vary across countries.
An ethical strategy is a strategy or cours
Impact of FDI on the Host Country
Social Environment FDI can have wide-reaching impact throughout the
o Culture values and behaviors including such things as the use of alcohol
and drugs, attitudes toward families.