Revisiting Dunning's four-way
classification of motives for FDI activity
IB Conference 2013
'Global value chains, dynamic capabilities and MNE motives‘
Henley Business School, University of Reading, 8-9 April 2013
Pavida Pananond
pavida@tbs.tu.ac.th
Thammasat Business School
Task
Define ‘the Motives’
Happy?
Why and Why not?
What to do if not happy? (i.e. don’t just be happy!)
‘THE’ 4 ‘seeking’ motives
(Dunning and Lundan, 2008)
Natural
resource
Market
Physical resources:
minerals, natural
resources
Following suppliers
or customers
Unskilled/semiskilled labour:
seeking lower costs
Knowledge type
resources: skills
and capabilities
Adapting to local
conditions
Economising on
transportation costs
Following
competitors
All these with assumption that
these FDI are self-contained in
each market
Efficiency
Strategic
asset
Through
differences in factor
endowment
Acquisition of strategic asset
that would enhance long-term
Through economy
competitiveness
of scale and scope
Happy?: Not quite
Tautological repetition
‘THE’ 4 ‘seeking’ motives
(Dunning and Lundan, 2008)
Natural
resource
Market
Physical resources:
minerals, natural
resources
Following suppliers
or customers
Unskilled/semiskilled labour:
seeking lower costs
Knowledge type
resources: skills
and capabilities
Adapting to local
conditions
Efficiency
Strategic
asset
Through
differences in factor
endowment
Through economy
of scale and scope
Economising on
transportation costs
Following
competitors
All these with assumption that
these FDI are self-contained in
each market
Acquisition of strategic asset that
would enhance long-term
competitiveness
Happy?: Not quite
Tautological repetition
Industries are linked through global value chains:
Markets are no longer self-contained
EMNEs: the need to create advantages through
international expansion
What to do?
• No more new terms. Enough said already.
• Interpret through ‘value creation’ in global value
chain structure: how to seek more value from
moving along the value chains
The Smile of Value Creation
Value
Added
Upstream
* Adapted from Mudambi, JIBS 2007
Downstream
8
THANK YOU!
Pavida Pananond, PhD
Associate Professor of International Business
Thammasat Business School
pavida@tbs.tu.ac.th