Discussion of the contribution of Dunning's Eclectic Theory

Technological changes, particularly in the space-shrinking technologies of transport and communication, help to draw possible the internationalization of economic activity and the development and geographic spread of transnational corporations (Dicken, 1992, p.120). These changes have made a thug 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 enthronisation 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 award for a firms decision to under go for 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 developing access to new customers, exploiting warlike advantages, etc. In addition, political considerations and environmental issues may in addition crop a role in FDI (Mahoney, Trigg, Griffin, and Pustay, 2001). In short, the sound 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 closely 3 one million million million win or about 16,000 won per share, for KorAms stock (Jae-kyoung, 17 February 2 004; Agence France Presse English, 23 Februa! ry 2004). The question is, why a company manage Citigroup Inc does not bulk up on consumer bank acquisitions in its domesticated market as what their rivals (such as: Bank of the States and J.P. Morgan) has done? Furthermore, Reuters report that Citigroup Inc is... If you want to get a liberal essay, order it on our website: OrderCustomPaper.com

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