"Don't Cry for Argentina: Emerging Market Multinationals and the Theory of the Multinational Enterprise"



Can the OLI model explain the pattern of foreign direct investments by emerging market multinationals (EMMs)? I argue that the OLI model suffers from one basic flaw: it assumes that all country-specific advantages (CSAs) are properties of a country and freely available to all firms operating there. But some CSAs have owners, usually local firms, and these owners can sometimes derive significant gains from the monopoly control of these resources, which they can then use to bargain for or to purchase the firm-specific advantages (FSAs) they lack, and compete with FSA-rich MNEs in their own market, and then internationally. I present a model that shows when local CSA owners are likely to capture most of the gains of putting together FSA-CSA bundles on emerging country markets, and how this has led to foreign direct investments by EMMs.
Contact information:
Patricia de Wilde-Mes