1) Of the competitive or ownership specific advantages of firms, which the received literature suggests are possessed by firms undertaking FDI, we have identified the three factors of particular significance in the hotel industry.
2) Of the location specific advantages offered by particular countries for the siting of foreign hotels the four most important factors for choosing one country over another identified by the respondents to our questionnaire, were (a) size and growth rate of host country, (b) the opportunities for tourism, (c) the available and quality of hotel related infrastructure (that is location bound complementary assets to the ownership specific advantages of the foreign hotels) and (d) political, social and economic stability.
The article specifies how the creation of a single European market alters the locational advantages of producing in Europe and strengthens the ownership specific advantages of European Community firms.
The propensity of a firm to engage in foreign production is influenced by the combination of ownership specific advantages, internalisation opportunities and locational advantages of the target market (Dunning, 1981).
Economic integration brings about changes in the distribution of locational advantages across markets and in the distribution of ownership specific advantages across international firms.
On the other hand, the dynamic effects of further integration on R&D activities and innovation potential will strengthen the ownership specific advantages of multinational firms of Community origin.
A good indication of the potential ownership specific advantages enjoyed by firms is to look at their comparative advantage in innovative activity.