A Knowledge: Learning-Based Perspective on Foreign Direct Investment and the Multinational Enterprise

  • Christos N. Pitelis
Chapter
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Part of the Advances in Spatial Science book series (ADVSPATIAL)

Abstract

We apply insights from Edith Penrose’s work to extant theories of Foreign Direct Investment (FDI) and the multinational enterprise (MNE) as developed by John Dunning’s Ownership, Location, Internalization (OLI) Paradigm, to propose a novel knowledge-learning-based theory of FDI and the MNE. We suggest that the knowledge/learning-based approach has important implications with regard to the nature of, and the interactions between, O, L and I, and that it helps endogenize and integrate the three elements of Dunning’s triad in the context of a dynamic, strategic and entrepreneurial perspective of the MNE. The learning-based perspective adds a cognitive dimension to the MNE and OLI. It supports a forward looking, synchronic decision making view, that may lead to apparently sub-optimal decisions, taken in view of anticipated changes, alongside strategic behaviour, aiming to effect such change, once decisions have been reached. It also helps explain new strategies of MNEs, which are harder to appreciate within the conventional paradigm.

Keywords

Foreign Direct Investment Multinational Enterprise Learning Perspective Locational Advantage Extant Theory 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Notes

Acknowledgments

I am grateful to John Dunning, Roger Sugden and Alain Verbeke for useful comments and suggestions on earlier drafts. The paper draws on and develops an earlier paper published in Management International Review (Pitelis 2007b). Support by the EC through the DYNREG project is gratefully acknowledged. Errors are ours.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  • Christos N. Pitelis
    • 1
  1. 1.Centre for International Business and Management, Judge Business School and Queens’ CollegeUniversity of CambridgeCambridgeUK

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