Eclectic paradigm

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Eclectic paradigm

A theory that posits three types of advantages benefiting a multinational corporation: ownership-specific, location-specific, and market internalization advantages.

Eclectic Paradigm

An approach to analyzing whether it is beneficial for a company to make a foreign direct investment. The eclectic paradigm considers three factors. The first factor is whether a comparative advantage exists for the product the company wishes to develop in the foreign country. The second factor considers whether there is an advantage to developing that product in one country instead of another. Finally, the third factor considers whether it would be better for the company to develop the product in that foreign country itself rather than outsource development to a local company already in that country.