Which theory do you think offers the best explanation of the historical pattern of horizontal fdi why answer: internalization theory seeks to explain why firms often prefer foreign direct investment to licensing as a strategy for entering foreign markets. 1which theoretical explanation (or explanations) of fdi best explains cemex's fdi 1internalization theory best explains cemex's fdi because cemex entered into many countries and bought domestic cement businesses instead of licensing. In short, monopolistic advantage theory explains first course of investment of a business firm in a foreign country the oligopoly theory explain the defensive investment behaviour in terms of oligopolistic reaction to retain the monopoly power of the firm. This essay will explain the theories of internationalization and the current fdi condition of south africa and moreover discuss the factors which are responsible to attract and limit the fdi within south africa and relate the factors to the theory.
Compare and contrast these explanations of fdi: internalization theory and knickerbocker's theory of fdi which theory do you think offers the best explanation of the historical pattern of fdi why. Internalization theory of the mne's the internalization theory was given by buckley and casson and is based on coase's (1937) criticism of neoclassical economics (pitelis, christos n and sugden, roger, the nature of the transnational firm, pg 17. An eclectic paradigm is a theory that provides a three-tiered framework for a company to follow when determining if it is beneficial to pursue foreign direct investment.
Essay # 3 foreign portfolio investment in comparison to fdi: foreign portfolio investment (fpi) is defined as an investment by individuals, firms, or a public body in foreign financial instruments, such as foreign stocks, government bonds, etc. Theory which seems to explain the internationalization process best, at least the first part of the process, is the theory of born-globals examples of aspects which do not fit to theories are that decisions to invest abroad have not been a. I believe that internalization theory best explains cemex's fdi because cemex has taken the initiative to enter into many countries and instead of licensing they bought domestic cement businesses and have grown into a worldwide powerhouse. According to the present case, the theoretical explanation that can best describe cemex's foreign direct investment (fdi) is the theory of internalization the foreign direct investment occurs when a firm invests directly in new facilities to produce and/or market in a foreign country. Internalization theory internalization theory the ownership advantage theory only partly explains why pdl accrue 10 does not explain why a firm would choose to enter a foreign market via fdi rather then exploit its ownership advantages internationally through other means, such as exporting its products, franchising a brand name, or licensing technology to foreign firms.
Which theoretical explanation, or explanation, of fdi best explains cemex's fdi for the internalization theory best way to explains cemex's fdi because published this. The internalization theory illustrates that the fundamental reasons for multinational enterprise to indulge in foreign direct investment is to internalize the most component of the process of production. Compare and contrast internalization theory and the knickerbocker theory of fdi which theory offers the best explanation of fdi and why explain your answer with a well-constructed and cogent response.
Alternatively, micro theories engage the organization as the level of analysis and consideration is given to both the foreign direct investment decision process and pattern pursued by firms in. Internalization theory was conceptualized by buckley and casson (1976) their short book consisted of several working papers prepared at the university of reading in the preceding two-year period. Foreign direct investment (fdi) is the acquisition, establishment or increase in production facilities by a firm in a foreign country (piggot and cook, 2006) in simple terms, fdi is described as the ownership and control of foreign assets (mmieh, 2010.
Internalization theory best explains cemex's fdi because cemex entered into many countries and bought domestic cement businesses instead of licensing cemex has a great system and needs to protect it from competitors. I do also review and discuss the various fdi theories that emerged, after the 1960 dissertation of hymer, in the works of dunning, buckley, casson, markusen, and others presented as transaction cost, internalization, and the eclectic theories of foreign direct investment.
Compare and contrast these explanations of fdi: internalization theory,vernons product life-cycle theory, and knickerbockers theory of fdi which theory do you think offers the best explanation of the historical pattern of fdi. The oli framework is a theory that explains motives and the rationale behind multinational corporations' (mncs) decision to choose fdi instead of licensing use of their name or product to foreign producers or sellers (lynn 2008). After that, cemex started to focus on globalization especially foreign direct investment (fdi) so they acquired the united states' cement plant in texas this was the start to focus on cross-border activities. Cemex entered into many countries and bought domestic cement businesses rather than licensing it can be best explained by internalization theoryit is used to study international business behavior.