Disadvantages Of The OLI-Framework Is An Economic Theory

The eclectic paradigm is an economic theory and is also known as the OLI-Framework or OLI-Model. It derives from the internalization theory and published in 1979 by John H. Dunning.
For Dunning, the structure of organization is not the only important factor. He added 3 more factors to this theory:
1. Internalization advantages
2. Ownership advantages
3. Location advantages
I. Internalization advantages:
1. Overview of Internalization advantages:
Internalization advantages are advantages by own production rather than producing through a partnership combination such as licensing or a joint venture. Companies may organize the creation and exploit their core proficiencies. The more the net profits of internalizing cross-border intermediate product markets, the more likely a businessman will engage in foreign production.

2. Internalization advantages of Vietnam:
Internalization advantage is the advantage that investors get through conducting synchronous production and business operations in many countries, using intra-firm trade to circulate goods, services and invisible elements between their affiliates. This method of operation helps investors limit the weakness of the market. For example, in the technology market, especially software, the seller must explain to the buyer how to use the technology but not explain so much because the buyer can reproduce the technology himself. This can lead to opportunistic behavior, meaning that each side tries to put in place terms that