dissemination risks
The risk associated with unauthorized diffusion of firm-specific know-how.
management control rights
The rights to appoint key managers and establish control mechanisms.
Internalization
The replacement of cross-border markets (such as exporting and importing) with one firm (the MNE) locating and operating in two or more countries.
technology spillovers
Technology diffused from foreign firms to domestic firms.
sunk costs
Cost that a firm has to endure even when its investment turns out to be unsatisfactory.
oligopoly
Industry dominated by a small number of players.
free market view
A political view that suggests that FDI unrestricted by government intervention is the best.
upstream vertical FDI
A type of vertical FDI in which a firm engages in an upstream stage of the value chain in a host country.
OLI advantages
A firm's quest for ownership (O) advantages, location (L) advantages, and internalization (I) advantages via FDI.
pragmatic nationalism
A political view that only approves FDI when its benefits outweigh its costs.
horizontal FDI
A type of FDI in which a firm duplicates its home country-based activities at the same value chain stage in a host country.
FDI outflow
Outbound FDI moving out of a country in a year.
radical view
A political view that is hostile to FDI.
market imperfections (market failure)
The imperfection of the market mechanisms that make transactions prohibitively costly and sometimes make transactions unable to take place.
Location
Advantages enjoyed by firms operating in a certain location.
FDI stock
Total accumulation of inbound FDI in a country or outbound FDI from a country across a given period (usually several years).
downstream vertical FDI
A type of vertical FDI in which a firm engages in a downstream stage of the value chain in a host country.
ownership
An MNE's possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded (VRIO) assets overseas in the context of FDI.
Knowledge spillovers
Knowledge diffused from one firm to others among closely located firms.
FDI inflow
Inbound FDI moving into a country in a year.
intrafirm trade
International transactions between two subsidiaries in two countries controlled by the same MNE.
bargaining power
Ability to extract favorable outcome from negotiations due to one party's strengths.
FDI flow
The amount of FDI moving in a given period (usually a year) in a certain direction.
agglomeration
Clustering of economic activities in certain locations.
foreign portfolio investment (FPI)
Investment in a portfolio of foreign securities such as stocks and bonds.
demonstration effect
The reaction of local firms to rise to the challenge demonstrated by MNEs through learning and imitation.
expropriation
Government's confiscation of foreign assets.
obsolescing bargain
The deal struck by MNEs and host governments, which change their requirements after the initial FDI entry.
vertical FDI
A type of FDI in which a firm moves upstream or downstream at different value chain stages in a host country.
Contagion (imitation) effect
The reaction of local firms to rise to the challenge demonstrated by MNEs through learning and imitation.