Keeping the eclectic paradigm simple: a brief commentary and implications for ownership advantages

The eclectic paradigm as developed by Dunning evolved over time, responding to changes in the way international business has been conducted as well as to link it with other related academic disciplines. I argue that if the paradigm continues to try and be a ‘big tent’ and a de facto theory of the firm that internalises every MNE-related phenomena, it will be in danger of becoming a tautology without a ‘gatekeeper’. Continual expansion to address new lacunae begins to have decreasing returns, either because the gatekeeper cannot expect to have the specialised knowledge to meet each market need equally well, or because the growing number of extensions makes the final product unwieldy. I propose a return to a basic eclectic paradigm (‘EP-lite’) consisting essentially of the OLI framework. This can then be complemented by other frameworks, theories and concepts as needed, rather than the continuous expansion to internalise their use. In a similar vein, increasing the number of sub-categories of ownership advantages does not in itself provide greater clarity. Besides, the ‘correct’ definition of what constitute O advantages is relative to the purpose for which it is being used.

JEL codes: F23, 03

Keywords: Eclectic paradigm, ownership advantages, development

UNU-MERIT Working Papers ISSN 1871-9872