International Management Essay Example | Topics and Well Written Essays - 2250 words

International Management - Essay Example Market uncertainties and product characteristics are equally important. Firms enter through the research and development process and then get a foothold in the country. In the face of competition firms even ignore the short-term losses when they find tremendous potential in investing. Hence, several variables need to be added to the existing model as resources have become readily available. Dunning sees an interrelationship between I and O type advantages in that internalisation helps a firm to acquire or increase those assets which give it an O type advantage. The essence of the eclectic approach is to consider the OLI type advantages together and in applying them to both international trade and production. This means that it is more of a synthesis of other approaches. Dunning calls his theory systemic because it relates to the way in which the firm coordinates its activities. Dunnings model attempts to integrate elements of micro and macro theory and to explain international trade and production within the same conceptual framework. It is centered on the notion that FDI is the most effective vehicle for serving foreign markets when the firm possesses the advantages under conditions of imperfect competition (Holsapple, Ozawa & Olienyk, 2006). Dunning’s framework according to Brouthers and Hennart (2007) can be conceptualized as a tool that combines insights fro m resource-based (firm-specific), institutional (location) and transaction cost (internalization) theories. The approach is dynamic since the OLI advantages interact with one another. L advantages may create incentives to internalise and I advantages create further O advantages. The main doubt about Dunnings model is whether it is more than a mere taxonomy. The model is a helpful classification - but does it explain anything? Dunning’s framework has not been found to be sufficient to arrive at a decision concerning the mode of entry in international markets. Additional