Internationalization of Chinese MNEs and Dunning’s Eclectic (OLI) Paradigm:A Case study of Huawei Technologies Corporation’s Internationalization Strategy

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: Today the newly emerging Chinese MNEs have increasingly been involved in the internationalization activities, but they have not attracted adequate attention in terms of internationalization studies. This paper will be based on Dunning’s Eclectic (OLI) Paradigm as theoretical foundation and deploy the method of case study to analyze the internationalization strategy of the Chinese high-technology MNE - Huawei Technology Corporation. This study intends to answer 3 questions: 1) What are the key components of Huawei’s internationalization strategy? 2) How much will Dunning’s eclectic paradigm of international production be applied to explain Chinese MNE - Huawei’s internationalization? 3) What are the special characteristics of the Huawei’s internationalization process, which might be the supplements to the existing Dunning’s eclectic paradigm? The evidences of case study show that the existing OLI paradigm still needs to be modified so as to apply to the MNEs from developing countries, and improved in order to explain all MNEs to a greater extent. The key findings are as follows: 1) Possessing comparative advantages may not be the prerequisite of MNEs’ engagement in FDI. MNEs from developing countries adopt catch-up strategy in their internationalization process. Therefore, enhancing their ownership advantages becomes a dynamic learning process. 2) In terms of location choice, MNEs from developing countries lay emphasis on achieving strategic goals and international layout. Therefore, they pay more attention to potential opportunities rather than worrying about economical and political instability, natural disaster and physic distance. 3) During the internalization process, MNEs from developing countries are more interested in the opportunities of enhancing transaction value rather than reducing transaction cost. The case of Huawei also suggests that the Dunning’s eclectic paradigm should take account of the potential exogenous institutional factors of home country and endogenous incentives of enterprise, especially the role of government and entrepreneurship in the context of transition economy.

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