Advantage Of Internationalization Essay

General Introduction
As globalization is a main factor in today’s economic landscape, we cannot rely anymore and the classical way of doing business. Foreign competition brings new players in the market and domestic firms will have to protect themselves while entrants will try to gain competitive advantages and reduce their competitive backwardness is specific fields. For this they will go abroad but internalization is a difficult stage in the process of corporates and can be done in wrong ways; too fast, too quick, too far etc. Dunning (1988) claimed that a company wanting to go abroad and thus becoming a MNE has to be endowed with significant « ownership advantages » in order to compensate their lack of competitiveness abroad. Ownership advantages

Some industries will invest more or less in R&D. It depends on the importance of the knowledge intensity across the different industries. Industries such as pharmaceuticals are electronics have more value added by knowledge while in other industries technology is a minor component of their competitiveness. Chung & Alcàcer used in their statistical analysis the random parameter logit (RPL). Trough this technique they were able to determine which industries are the must prominent in knowledge seeking and how firms value the different locations but also to capture the differences in valuations that each firm gives to different factors. Chung & Alcàcer showed that the pharmaceutics sector the most eager is for knowledge seeking for example. This sector will give more value to the technical activity of the region instead of market demand for example. Technical activity often quantified by using the number of engineers/scientist of the region and the amount of patents admitted. To conclude, Almeida (1996) conducted a study around the semiconductor sector and showed that foreign firms will take more advantage from the local knowledge than local enterprises. He suggests that foreign firms in seek of knowledge sourcing do not target regions but specific firms in quest of their learning. At the same time Almeida (1996) propones that foreign firms do not exclusively absorb knowledge but they also contribute to the incumbents. They join knowledge exchange societies with the incumbents and local universities. We can thus conclude that entrants are knowledge absorbers and incumbents continuously contribute to the technological development of a region (Almeida,