Discussion of the contribution of Dunning's Eclectic Theory

Technological changes, particularly in the space-shrinking technologies of transport and communication, help to conk possible the internationalization of economic activity and the development and geographical spread of transnational corporations (Dicken, 1992, p.120). These changes have made a street fighter explosion in Foreign Direct Investment (FDI) in the last 20 years throughout the world. FDI has been growing at a high rate, and trade barriers have fallen extensively at the same time (De Santis and Stahler, 2003; Javalgi, Griffith, and White, 2003). FDI itself is a form of investiture that is best suited to provide risk sharing in a world economy where financial contracts are plagued by imperfect enforcement mechanisms (Albuquerque, 2003). There are numerous factors that can point for a firms decision to under administer FDI. Some FDI may be undertaken to reduce the firms costs; some of the decision to engage in FDI may be affected by such take up factors as developin g access to new customers, exploiting warring advantages, etc. In addition, political considerations and environmental issues may also crop a role in FDI (Mahoney, Trigg, Griffin, and Pustay, 2001). In short, the primeval character of any business firm to engage in FDI, of course, is to make a profit (Hill, 2000). One of the examples of FDI is the foreign investment made by Citigroup Inc to buy South Koreas KorAm Bank for US$ 2.7 billions. Under the awake agreement, the worlds largest lender will pay or so 3 one million million million win or about 16,000 won per share, for KorAms stock (Jae-kyoung, 17 February 2004; Agence France Presse English, 23 February 2004). The question is, why a company manage Citigroup Inc does non bulk up on consumer bank acquisitions in its domestic market as what their rivals (such as: Bank of the States and J.P. Morgan) has done? Furthermore, Reuters inform that Citigroup Inc is... If you want to ge t a liberal essay, order it on our website:! OrderCustomPaper.com

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