Question

The _____ states that combining location-specific assets or resource endowments and the firm's own unique assets often requires FDI and it also requires the firm to establish production facilities where those foreign assets or resource endowments are located.

Answer 1

Eclectic paradigm

Step-by-step explanation:

The eclectic paradigm of international production or OLI (ownership, location and internationalization) model is used by companies that are evaluating whether to engage in foreign direct investment (or internalization) or not.

It was developed in the 1970s and it is based on the premise that if it is cheaper for a company to produce internally, it will not seek to to produce in foreign countries. This analysis is based on three key factors:

• ownership advantages: are the ownership rights of the company upheld in foreign countries
• location advantages: does the company benefit form doing business in another specific country
• internationalization advantages: is it better for the company to produce internationally than domestically