How Outward Foreign Investment from Emerging Markets Affects Economic Development at Home: Using the Eclectic Paradigm to Synthesize Two IB Literatures
Year: 2020
Type: preprint
Abstract: Purpose – This paper uses the eclectic paradigm as a broad organizing framework to bring together two somewhat parallel IB literatures, one on the development effects of multinational enterprise activity and the other on the internationalization of emerging market multinationals (EMNEs). I do so to better understand how outward foreign investment shapes economic development in firms‟ home countries.
Design/methodology/approach – Considering that the characteristics of foreign investment by EMNEs likely differ from that of their developed economy counterparts, and that such characteristics may have unique development consequences, I revisit one of IB‟s overarching theories to rethink how ownership, location, and internalization advantages take shape and stimulate diverse development outcomes.
Findings – My narrative review and conceptual analysis indicate that the eclectic paradigm is a valuable framework that can be used to shed light on underexplored phenomena and thereby inform important policy debates. The analysis suggests that unique characteristics of EMNE investment simultaneously have positive and negative development consequences in their home countries.
Practical implications – I set out a research agenda that revolves around six propositions that separately relate three distinct characteristics of EMNE investment to two development outcomes, namely spillovers and direct effects on home-country employment. My propositions suggest that important policy dilemmas potentially apply, in that each of the three characteristics positively affects one of the aspects of development, but negatively the other.
Originality/value – My research agenda presents international business scholars with new opportunities to build on a history of policy-making impact, now geared towards resolving society‟s grand challenge of underdevelopment.
Source: SSRN Electronic Journal
Author: Guus Hendriks
Institution: University of Warwick
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3126910908