The OLI Framework (The Eclectic Paradigm) | International Business | From A Business Professor
When a company decides to expand its business to a foreign country, there is a wide variety of entry strategies to choose from and they all have their pros and cons. Often used strategies are exporting, licensing, franchising, strategic alliance, joint venture, and wholly-owned subsidiary. So how to choose an appropriate entry strategy? For managers, one of the most practical approaches to help them at least exclude some options is by using the OLI Framework, also known as the eclectic paradigm.
OLI is an acronym for Ownership-, Location- and Internalization- advantage. It is based on internalization theory and was first expounded upon in 1979 by the British economist, John H. Dunning.
According to this paradigm, a company needs all three advantages to be able to successfully engage in Foreign direct investment. If one or more of these advantages are not present, the focal company might want to use a different entry strategy. In this video, I will introduce each of the three advantages and provide a real-world example for you.
OLI is an acronym for Ownership-, Location- and Internalization- advantage. It is based on internalization theory and was first expounded upon in 1979 by the British economist, John H. Dunning.
According to this paradigm, a company needs all three advantages to be able to successfully engage in Foreign direct investment. If one or more of these advantages are not present, the focal company might want to use a different entry strategy. In this video, I will introduce each of the three advantages and provide a real-world example for you.
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