Geography Reference
In-Depth Information
Also associated with the OLI paradigm, and central to our arguments
here, is Dunning's classification of the different types of MNE activities
(1993, 1994), which is based on his motivation to understand the estab-
lishment of foreign affiliates and subsidiaries according to the locational
advantages offered by the host economy. Building on the earlier FDI
typology of Behrman (1972), the classification identifies four main types
of MNEs (see also Dunning and Lundan 2008):
Resource or asset seekers
: MNEs investing in particular locations
abroad in order to have access to tangible or intangible resources
and assets, such as raw materials, labour and skills, which are either
unavailable in the home location or available in the host location
at a lower cost than at home. It is critical, in this case, to draw a
clear distinction between MNEs aiming at host locations' physical
resources and cheap labour, which we will call
general- asset seekers
,
and MNEs which are prompted to establish affiliates abroad spe-
cifically in response to the need to acquire particular technological
capabilities, management and marketing expertise or organiza-
tional skills, here called
specific- asset seekers
.
●
Market seekers
: MNEs investing in order to supply local or adjacent
markets via proximity to demand. Such MNEs are mostly moti-
vated either by the emergence or growth of new or existing leading
markets; or by the need to adapt products to local tastes; or by
the existence of high transactions costs or trade barriers favouring
'tariff-jumping' local production in preference to exporting.
●
Efficiency seekers
: MNEs investing in order to rationalize and
restructure previous investments which are either resource- or
market-led. It is useful to distinguish two main types also in this
category:
global value chain efficiency seekers
, which are the MNEs
taking advantage of international differences in factor costs and
endowments among locations typically at different stages of eco-
nomic development; and
scale and scope economies seekers
, which
are the MNEs looking for rationalization across different institu-
tional settings, market and industrial structures, and polices, among
locations with fairly similar levels of economic development.
●
Strategic- asset seekers
: MNEs which are engaging in foreign opera-
tions usually by acquiring the assets of foreign firms, and aiming
primarily at advancing their long-term strategic objectives in terms
of global capabilities and competitiveness. By purchasing over-
seas assets - and therefore localized knowledge, competencies and
capabilities - MNEs in this category strengthen their own O advan-
tages and/or weaken those of their competitors.
●
