industrial sectors or countries? How does Reich’s work relate to the current
debates about the disadvantages of globalization?3 Find a recent example of an MNC either establishing or closing down a sub-
sidiary in a particular country. Can you explain this decision based on either
Porter’s diamond or Reich’s prediction of a new world order?
10 FURTHER READING
- Dunning, J.H. (2000) ‘The Eclectic Paradigm as an Envelope for Economic and Business
Theories of MNE Acitivity’,International Business Review, vol. 9, pp. 163–190.
This paper provides an update of Dunning’s thinking with regard to the eclectic paradigm, tak-
ing into account four significant developments in the 1980s and 1990s: maturation of the
knowledge-based economy, integration of economic and financial activity, liberalization of markets
and the emergence of several new countries as important players on the global stage. - Porter, M.E. (1990) The Competitive Advantage of Nations, London and Basingstoke:
Macmillan Press.
After his influential work on competitive advantage and competitive strategy, this book moves
Porter’s analysis to the country level. Although, like Dunning’s eclectic theory, Porter’s analysis
is by no means completely novel, it shares with Dunning’s theory the advantage of integrating
previous work and some new insights into a comprehensive and coherent framework. The dia-
mond framework has joined Porter’s five-forces and value-chain frameworks as one of the key
analytical tools in analysing competitive advantage. In particular Porter’s concept of ‘clusters’,
or groups of interconnected firms, suppliers, related industries and institutions that arise in par-
ticular locations, has been highly influential in setting public policy. - UNCTAD:World Investment Report.
UNCTAD’s annual world investment reports are a treasure trove of statistical information on
FDI. In addition, each annual report offers a detailed analysis of a specialized topic in inter-
national business. The past years have for instance seen reports on the role of MNCs in promot-
ing export competitiveness (2002), linkages between foreign affiliates of MNCs and local
companies in developing countries (2001), cross-border mergers and acquisitions (2000) and
the impact of FDI on economic development (1999).
REFERENCES
Coase, R.H. (1937) ‘The Nature of the Firm’, Economica, November, pp. 386–405.
Dunning, J.H. and McQueen, J. (1982) ‘The Eclectic Theory of the Multinational Enterprise and
the International Hotel Industry’, in A.M. Rugman (ed.) New Theories of Multinational
Enterprise, London: Routledge. pp. 79–106.
The International Division of Labour 31