A markup is only possible when a firm enjoys some degree of
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·MONOPOLISTIC ADVANTAGE:
Suggests that FDI is preferred by MNEs because it provides the firm with control over resources and Capabilities in the foreign market, and a degree of monopoly.
·UPPSALA/INTERNATIONALIZATION PROCESS THEORY: internationalisation as an
Incremental process of acquisition, integration and use of knowledge on foreign
Markets (No exporting —Exporting via agent —joint venture
—wholly owned subsidiary). 1-Sell our product. 2-Invest money and have your own commercial subsidiary. 3-Establish your own productive subsidiaries.
·INTERNALISATION THEORY: Problem-firms cannot rely on information bc markets of knowledge are imperfect institutions where info is weak and asymmetric. Solution-MNEs organism the firm, specific resources to overcome externalities by 1-Development and accumulation of internal research, 2-Acquisiton of externally developed knowledge, 3-Organized strategies to avoid exit of internal/acquired knowledge, 4-Outsourcing to other firm if costs of IB are bigger than benefits. Effects-MNEs can replace the market
ECLECTIC/OIL PARADIGM: Ownership adv (tangible assets, patents and designs, organizational efficiencies) + Location adv (low-cost labour and raw materials, government incentives to DFInvestors) + Internalization adv (reduction in transaction costs, control over operations, avoidance of tariffs and barriers)
LLL THEORY: How small corporations from backward economies can become global giants? If the sector of specialization is growing fast or small corporations have basic resources or Linkage, Leverage and Learning from global leaders
INTERNATIONAL PRODUCT LIFE-CYCLE THEORY: each product transforms the way we live and each product has a cycle.