Fdi Internalization Advantages

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12. The degree of the technology transfer
After the discussion of what benefits the FDI might bring to the company and how to attract potential investors in the previous chapters, this chapter attempts to find the factors that may affect the absorption and the achievement that the FDI might bring to the company. It is commonly known that the FDI will bring the technology and the business skills to the company in the host country. However, the transferring will also highly depend on the company itself. This chapter will concentrate on two factors, the effect of the internalization advantages, and the absorptive capacity of the company.

12. 1 Internalization advantages
In the Dunning’s OLI Paradigm, internalization advantages refer to the control of the foreign parent. When the foreign firm is in possession of certain technology, the foreign firm would like …show more content…

If the company desired to shift from foreign to domestic technology, it is necessary to increase expenditures and investments in R&D (Chang, McAleer and Tang, 2013). The research indicated that the R&D investment and the inward FDI exhibit a commentary relationship. The investment in the R&D was around 11% of the gross profits in Accessen Group, and a continuing strengthening on the research and development of the company is highly recommended in order to shorten the technology gap between the company and the foreign partner.

Other supplementary factors include the financial support, communication, culture distance and the company’s acceptance. Each factor will serve as a motivator for the knowledge absorption, and enhance the competitiveness of the Accessen Group. To fully accomplish the objective of improving the competitiveness of the company through the attraction of inward foreign direct investment, it will need the cooperation and coordination in every department of the company and the constant communication with the foreign

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