Dunning was broadly known for his research in economics of worldwide direct investment and the multinational enterprise. His OLI paradigm, specifically, remains because the predominant theoretical contribution to check worldwide enterprise subjects. Hymer and Dunning are thought of founders of worldwide business as a specialist area of study. Hymer’s second part is his neoclassical article in 1968 that features a principle of internationalization and explains the course of progress of the international enlargement of firms. Hymer is the “father of the idea of MNEs”, and explains the motivations for corporations doing direct enterprise abroad.
These variables are world focus, global synergies, and world strategic motivations of MNC. Lastly, a three way partnership and wholly owned subsidiary are two extra entry modes in international business.
A three way partnership is when a firm created is jointly owned by two or extra corporations (Most three way partnership are partnerships). Licensing and franchising are two additional entry modes that are similar in operation. Licensing permits a licensor to grant the rights to an intangible property to the licensee for a specified time frame for a royalty fee. In a turnkey project, an independent contractor is hired by the company to oversee the entire preparation for coming into a international market. Once the preparation is full and the top of the contract is reached, the plant is turned over to the company fully ready for operation. Once a firm decides to enter a overseas market, it must resolve on a mode of entry. There are six completely different modes to enter a international market, and each mode has professionals and cons which are associated with it.
The firm should determine which mode is most appropriately aligned with the company’s objectives and aims. Among fashionable economic theories of multinationals and international direct investment are internalization theory and John Dunning’s OLI paradigm .