The ________ theory states that firms undertake foreign direct investment when the features of a particular location combine with ownership and internalization advantages to make a location appealing for an investment.
A)rational production
B)international product life cycle
C)market imperfections
D)eclectic

Question

Quizplus · Accepted Answer

The eclectic theory, also known as the OLI framework, explains why firms engage in foreign direct investment. It suggests that firms will seek to invest in foreign countries when they possess ownership advantages (such as proprietary technology or managerial expertise), location advantages (such as natural resources or a skilled workforce), and internalization advantages (such as the ability to maintain control over their operations and protect their intellectual property). The other options (A, B, C) are other theories of FDI that do not fully encompass the three advantages mentioned in the eclectic theory.

The ________ Theory States That Firms Undertake Foreign Direct Investment