This co-existence occurs because in the absence of firm-level distinctive capabilities (i.e., ownership-specific advantage) the firm cannot overcome its liabilities of foreignness or newness.
* Our analysis of 1,355 Chinese private enterprises shows that their ownership-specific advantages in areas such as corporate governance, inherited advantage from mergers and acquisitions of state-owned companies, and inward internationalization increase the level of outward internationalization.
Such arguments, however, do not ascertain whether efficiency of foreign firms is due to any ownership-specific advantage or to other factors such as industrial distribution (product mix), size of the firm, capital intensity, skill intensity, market concentration, and export orientation.
The authors conclude that they find that foreign firms are more productive than their local counterparts and this suggests that foreign firms enjoy some ownership-specific advantage. It would be extremely relevant to know about factors which explain this ownership-specific advantage.
could be competitive in nature and firms could enjoy monopoly power, "possession of a bundle of scarce, unique and sustainable resources and capabilities, which essentially reflect the superior technical efficiency of a particular firm relative to those of its competitors" (Dunning 2000a: 168).
According to Dunning's OLI-model, a global allocation of the production depends on the analysis and understanding of three advantages: Ownership-Specific Advantages, Location-Specific Advantages and Internalization-Incentive Advantages (Dunning & Lundan, 2008), thus the title OLI-model.
Ownership-specific advantages are advantages that the company has vis-a-vis companies in the particular markets in which it operates or plans to operate.
This is due to the fact that China authorised the establishment of wholly foreign-owned enterprises and promised higher property rights protection on ownership-specific advantages
as part of its WTO commitments, allowing MNEs to maximise their returns on these specific advantages and have full control over the business operations, and thus being willing to transfer more advanced technology to China.
According to the traditional theory of multinational corporations (MNCs), foreign-affiliated establishments are expected to have higher productivity than local establishments because MNCs have several ownership-specific advantages
, including superior production technology and managerial resources.
In the Chinese context, ownership-specific advantages
mainly take the form of specialized knowledge and relationships with the government and customers in the PRC.
According to Dunning, ownership-specific advantages
refer to the extent and nature of the technological, managerial, and marketing advantages of international law firms vis-a-vis local law firms in the country in which they are producing or contemplating value-added legal advice.
The first is Ownership-specific advantages
or firm specific advantages (FSAs), these are advantages which reside at the firm level.