Abstract
Drawing on the Penrosean theory of the growth of the firm, this paper develops a balancing-process approach to explain the motivations and location choices of Foreign Direct Investment (FDI). In this approach, FDI is viewed as a means to balance a firm's portfolio of resources and capabilities through utilising resources and capabilities available in international markets with the ultimate goal of achieving fast and sustainable growth. Based on the Chinese yin-yang perspective, this approach joins exploitative and explorative FDI as a dynamic unity and explains how exploitation and exploration jointly drive a firm's motivation and location choice of internationalisation. Our balancing-process approach joins historically independent streams of research in a single framework and uncovers a new and more fundamental mechanism that drives FDI: The need to address resource constraints.
Original language | English (US) |
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Pages (from-to) | 537-565 |
Number of pages | 29 |
Journal | European Journal of International Management |
Volume | 9 |
Issue number | 5 |
DOIs | |
State | Published - 2015 |
Keywords
- Balancing process
- Exploitation-exploration
- Foreign direct investment
- Location choice
- Motivation
- Penrosean theory of growth
- Transparadox
- Yin-yang
ASJC Scopus subject areas
- Business and International Management
- Education
- Organizational Behavior and Human Resource Management