→ Intro To IB Week 9b → Start Learning / Download MP3 Flashcards

Question		Answer
foreign direct investment (FDI) start learning		Investment in, controlling and managing value-added activities in other countries.
emerging economy MNEs start learning		MNEs that originate from an emerging economy and are headquartered there.
foreign portfolio investment (FPI) start learning		Investment in a portfolio of foreign securities such as stocks and bonds.
joint ventures start learning		Operations with shared ownership by several domestic or foreign companies.
horizontal FDI start learning		FDI that creates operations abroad at the same position in the value chain as the operation in the home country
vertical FDI start learning		FDI in operations in different stages of the value chain, upstream or downstream.
upstream vertical FDI start learning		FDI in an upstream stage of the value.
downstream vertical FDI start learning		FDI in a downstream stage of the value chain in two different countries.
FDI flow start learning		The amount of FDI moving in a given period (usually a year) in a certain direction
FDI stock start learning		The total value of inbound FDI in a country or outbound FDI from a country operating at a given point in time.
OLI paradigm start learning		A theoretical framework positing that ownership (O), location (L) and internalization (I) advantages combine to induce firms to engage in FDI.
liability of foreignness start learning		The inherent disadvantage a firm faces when competing with local firms in a foreign country.
location-bound resources start learning		Resources that cannot be transferred abroad.
ownership advantages (O-advantages) start learning		Resources of the firm that are transferable across borders and enable the firm to attain competitive advantages abroad.
locational advantage (L-advantage) start learning		An advantage enjoyed by firms operating in certain locations.
agglomeration start learning		The location advantages that arise from the clustering of economic activities in certain locations.
knowledge spillovers start learning		Knowledge diffused from one firm to others among closely located firms.
internalization advantages (I-advantages) start learning		Advantages of organizing activities within a multinational firm rather than using a market transaction
transaction costs start learning		The costs of organizing
market failure start learning		Imperfections of the market mechanism that make some transactions prohibitively costly
asset specificity start learning		An investment that is specific to a business relationship.
intra-firm trade start learning		International trade between two subsidiaries in two countries controlled by the same MNE
licensing start learning		A contract by which a firm allows another firm to use its intellectual property rights in return for a fee.
franchising start learning		A contract by which a firm allows another firm to use its branded service or products in return for a fee.
dissemination risk start learning		The risk associated with unauthorized diffusion of firm-specific know-how.
tacit knowledge start learning		Knowledge that is noncodifiable and whose acquisition and transfer require hands-on practice.
local content requirements start learning		Requirement that a certain proportion of the value of the goods made in a country originates from that country.
bargaining power start learning		The ability to extract a favourable outcome from negotiations due to one party’s strengths.
obsolescing bargain start learning		Refers to the deal struck by MNEs and host governments which change their requirements after the initial FDI entry.
sunk costs start learning		Up-front investments that are non-recoverable if the project is abandoned.
expropriation start learning		Government confiscation of private (foreign-owned) assets
state-owned enterprises (SOEs) start learning		Companies with direct ownership by the state.
soft budget constraint start learning		Phenomenon that SOEs tend to receive extra resources from the state when facing financial difficulties.
sovereign wealth fund (SWF) start learning		A state-owned investment fund composed of financial assets such as stocks, bonds, real estate or other financial instruments
experiential knowledge start learning		Knowledge learned by engaging in the activity and context.
Uppsala model start learning		A model of internationalization processes focusing on learning processes.
network internationalization model start learning		A model of internationalization that focuses on the international growth of business networks.
stages models start learning		Models depicting internationalization as a slow stage-by stage process an SME must go through
international new venture (born global) start learning		Start-up company that, from inception, seeks to derive significant competitive advantages from the use of resources and the sale of outputs in multiple countries.
international experience start learning		Personal experience of living in another country.
immigrant entrepreneurs start learning		People who set up a business after migrating to another country.
mimetic behaviour start learning		Imitating the behaviour of others as a means to reduce uncertainty.
foreign subsidiary start learning		An operation abroad set up by foreign direct investment.
entry strategy start learning		A plan that specifies the objectives of an entry and how to achieve them.
natural resource-seeking FDI start learning		Investors’ quest to pursue natural resources in certain locations.
market-seeking FDI start learning		Investors’ quest to go after countries that offer strong demand for their products and services
efficiency-enhancing FDI start learning		Investors’ quest to single out the most efficient locations for each value chain activity.
capability-enhancing FDI start learning		Investors’ quest for new ideas and technologies to upgrade their own technological and managerial capabilities.
location-specific advantages start learning		Advantages that can be exploited by those present at a location
global cities start learning		Cities with interconnectedness, cosmopolitanism, and abundance of advanced producer services
first-mover advantages start learning		Advantages that first movers obtain and that later movers do not enjoy.
late-mover advantages start learning		Advantages that late movers obtain and that first movers do not enjoy
modes of entry start learning		The format of foreign market entry.
non-equity modes start learning		A mode of entry that does not involve owning equity in a local firm.
equity modes start learning		A mode of entry (JV that involves taking full or partial) equity ownership in a local firm
greenfield investments start learning		Building factories and offices from scratch.
acquisition start learning		The transfer of the control of operations and management from one firm (target) to another (acquirer), the former becoming a unit of the latter.
partial acquisitions start learning		Acquisitions of an equity stake in another firm.
strategic alliance start learning		Collaboration between independent firms using equity modes, non-equity contractual agreements, or both.
scale of entry start learning		The amount of resources committed to foreign market entry.
platform investment start learning		An investment that provides a small foothold in a market or location.
The arm’s length start learning		The companies are independent of one another and trade based on contractual arrangements. There is no ownership from one company of the other.
Psychologically proximate start learning		They consider those countries which they perceive as being similar to the home country in terms of institutional environment and/or culture.

Intro to IB week 9b

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