1 Introduction
Centuries ago it was out of question for companies to operate worldwide. The costs to act global had been too high as well as the existent lack of knowledge about other countries, cultures, languages, foreign demands etc. But a few decades ago, companies started to run for globalisation which is seen as a process of internationalisation. Globalisation can be defined as a global network of economic processes. Today companies face less risk when engaging in international activities than ever before. Nowadays markets are easy accessible and the society faces a similar development concerning living standards all over the world. Companies notice the existing possibilities when passing national borders. Today internationalisation is an option for big companies as well as for SME´s. Internationalisation can be defined more exactly as the name “international” predicts as an international network between companies of different nations which means in most cases industrialised nations. Today almost all products and services are internationalised and available on the world market. It is indispensable that enterprises conduct business in host countries to remain competitive. Most companies are aware of internationalisation processes. Multinational companies are enterprises which operate in two or more countries. Bundeszentrale für politische Bildung (1) states that in 1980, approximately 17.000 MNE´s existed. Further Bundeszentrale für politische Bildung (1) explains that already in the year 2000, 63.000 MNE´s existed and in 2004 existed even 70.000 MNE´s. According to Bundeszentrale für politische Bildung (1) belong MNE companies to the countries where their headquarter is based in. Further Bundeszentrale für politische Bildung (1) estimates that approximately 9.000 MNE´s belong to Germany and approximately 2.500 international firms belong to the United States. As it can be observed, the trend in businesses is to become a multinational company. To become a company which engages in international activities is a long time process consisting of various steps. Therefore firms having international intentions began to question under which circumstances they should internationalise its activities and which market entry form they should choose.
Methodology
Various theories exist which cover that topic for example:... This paper focuses on two approaches which explain firms intention to establish activities outside their national borders...
Inhaltsverzeichnis
- Introduction
- Definitions
- Multinational enterprise
- Export
- Foreign direct investment
- International contracts
- The eclectic paradigm of international production
- OLI advantages
- Ownership advantages
- Location advantages
- Internationalisation advantages
- Market Entry Strategies
- Endowment/Market Failure Paradigm
- Criticism
- OLI advantages
- Uppsala-model of Internationalisation
- Patterns of Internationalisation
- Establishment Chain
- Psychic Distance Chain
- Model of Internationalisation
- State Aspects
- Change Aspects
- Criticism
- Patterns of Internationalisation
- Critical Comparison
- Comparison Eclectic Paradigm & Uppsala-model
- Dynamic vs. static
- Negligence of demand
- Validation
- At home and abroad
- Mode & point of time
- Individuals decide
- Disregard industries and companies particularities
- Eclectic Paradigm in favour of Uppsala-model
- A simple vs. a complex approach
- Uncertainty avoidance vs. rationality
- Uppsala-model in favour of Eclectic Paradigm
- Fast vs. slow Internationalisation process
- Explanation of market entry strategies vs. gradual process
- Comparison Eclectic Paradigm & Uppsala-model
- Conclusion
- Outlook
- Eclectic Paradigm
- Uppsala-Model of Internationalisation
- Bibliography
- Declaration
Zielsetzung und Themenschwerpunkte
This seminar paper aims to critically compare two prominent theories of internationalization: the Eclectic Paradigm by Dunning and the Uppsala School model. The paper analyzes the strengths and weaknesses of each theory, highlighting their key differences and similarities. The objective is to provide a comprehensive understanding of these theories and their implications for firms engaging in international business activities.
- The Eclectic Paradigm and its core components (OLI advantages, market entry strategies, endowment/market failure paradigm)
- The Uppsala School model and its focus on gradual internationalization, establishment chains, and psychic distance
- A critical comparison of the two theories, examining their strengths, weaknesses, and areas of overlap
- The implications of each theory for firms' internationalization strategies and decision-making processes
- The evolution and future directions of internationalization theories in the context of globalization and changing business environments
Zusammenfassung der Kapitel
The introduction provides a brief overview of the historical context of internationalization and the increasing importance of global business activities. It defines key terms such as multinational enterprise, export, foreign direct investment, and international contracts, setting the stage for the subsequent analysis of internationalization theories.
The chapter on the eclectic paradigm delves into Dunning's framework, explaining the OLI advantages (ownership, location, and internationalization) that drive firms' internationalization decisions. It explores the various market entry strategies available to firms and discusses the endowment/market failure paradigm, which emphasizes the role of resource endowments and market imperfections in shaping internationalization patterns. The chapter also critically examines the limitations of the eclectic paradigm.
The chapter on the Uppsala School model presents a contrasting perspective on internationalization, focusing on the gradual and incremental nature of firms' international expansion. It introduces the concepts of establishment chains and psychic distance, highlighting the role of experience and familiarity in firms' internationalization decisions. The chapter also explores the model's strengths and weaknesses, providing a balanced assessment of its contributions to the field of international business.
The chapter on critical comparison offers a detailed analysis of the similarities and differences between the eclectic paradigm and the Uppsala School model. It examines the strengths and weaknesses of each theory, highlighting their respective contributions to understanding internationalization phenomena. The chapter also discusses the implications of each theory for firms' internationalization strategies and decision-making processes.
Schlüsselwörter
The key terms and focus themes of the text include internationalization, multinational enterprises, foreign direct investment, eclectic paradigm, OLI advantages, Uppsala School model, establishment chain, psychic distance, market entry strategies, and critical comparison. The text explores the theoretical foundations and practical implications of these concepts, providing insights into the dynamics of international business activities.
- Citar trabajo
- Master of Arts Daniela Margardt (Autor), 2007, A critical comparison of Internationalisation theories: Eclectic Paradigm of Dunning vs. Uppsala School, Múnich, GRIN Verlag, https://www.grin.com/document/127374
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