From OLI to OLMA: Incorporating Higher Levels of Environmental and Structural Complexity into the Eclectic Paradigm

Abstract

Theorists using the eclectic paradigm have drastically restricted their analytic scope to the firm and its subsidiaries, rarely exploring more finely grained firm structures, such as business processes. By contrast, organisational theorists examining multinational firm behaviour have employed a richly differentiated array of firm structural forms though without developing a precise delineation of the international business environment. Eclectic researchers are adept at handling environmental, but not structural, complexity, while the reverse seems true for organisational theorists. This study extends the eclectic paradigm by incorporating higher levels of environmental and structural complexity through two methods: (1) a deconstruction of the multinational firm into business processes; and (2) a more complete definition of the international business environment, called geovalent elements. The paper argues that an enhanced eclectic paradigm called OLMA (for Ownership, Location, Mode of entry, and Adjustment) provides the complete set of concepts needed for studying the modern multinational firm.Multinational Firms, International Business, Theory, Eclectic Paradigm, Adaptation, Environment,

Dunning's eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI

“…These institutional determinants can be both firm as well as country specific (Dunning, 2006). In doing so, we also build on Guisinger (2001) and North (1990North ( , 2005) and we complement previous empirical studies. 3 The eclectic paradigm offers a holistic framework to investigate the significance of factors influencing both the initial expansion of multinational enterprises (MNEs) by foreign production and the subsequent growth of their activities (Dunning & Robson, 1987:1, Estrella Tolentino, 2001.…”

“…In defence to this, the chosen variables appear to be justified by economic or organisational theory (Dunning, 2001 :177). Furthermore, by having an all encompassing list, the framework is able to incorporate complementary approaches such as the institutional theory and so does this study, drawing on North (1990North ( , 2005 and Guisinger (2001). This is consistent with the fact that although scholars concentrated initially on factor endowments, especially labour costs and productivity (Bevan, Estrin, & Meyer, 2004 :45), recently multinationals have increasingly focused on 'created assets' (Narula & Dunning, 2000) including knowledge-based assets, infrastructure and institutions of the host economy.…”

Abordagem Conceitual às Estratégias de Internacionalização sob Pressões Institucionais Duais para Legitimidade e Conformidade

“…P. Ferreira, Li, & Jang, 2009). Guisinger (2001) sugeriu que a essência da pesquisa em negócios internacionais é a adaptação que as empresas precisam fazer quando enfrentam ambientes que desconhecem nos países estrangeiros. Os desafios de adaptação emergem pelo desconhecimento das normas e regulações locais, falta de legitimidade no país receptor, instituições fracas ou ineficazes (Hymer, 1976;Wright, Filatotchev, Hoskisson, & Peng, 2005), indiciando que o ambiente institucional do país receptor molda as estratégias de entrada.…”

The International Entrepreneurial Firms’ Social Networks

“…The MNCs hold the resources, large manufacturing capacity, their own intelligence systems, and may set up their fully-owned subsidiaries in the host countries. In stark contrast, networking is the only, or at least it is often the best, strategy available for IEFs to explore opportunities in the foreign markets given their resource pool, capabilities, informational constraints and the complexity imposed on operating in international markets (Guisinger, 2001).…”

“…That is, the diversity of markets and the differing host markets' characteristics require IEFs do develop distinctive capabilities in acquiring information, or in alternative distinctive ties that provide access to the information. The complexity of operating in international environments (Guisinger, 2001) increases the difficulties for the small IEF, partly due to their limited resource endowment, in building an information system. Hence, the identification of markets' idiosyncrasies, and emerging demand for certain products and services across countries, benefits from social interfaces with local information sources.…”