A Comment on the Extension of the OLI Framework to Emerging Economies

Abstract

Does Dunning’s Ownership–Location–Internalization (OLI) framework explain the internationalization of business groups in emerging economies? I argue that business groups do not have traditional ‘firm specific advantages’ (FSAs) that the OLI framework talks about, but their ownership advantages derive from the home country locational advantages. However, as pro-market reforms get implemented in emerging economies, these FSAs of business groups will increasingly provide less marginal benefits. Under such conditions, business groups will develop a new range of FSAs, which are independent of their locational advantages. I extend the debate as to whether the internationalization of business groups is unique enough to require new theories.