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From the 1990s, many empirical works, application or extensions of the eclectic paradigm were received in literatures. Due to its flexible applicability and generality, the eclectic paradigm has been applied in many areas related to internationalization and MNCs’ activities in different economic sectors and different countries or regions from which the MNCs were originated or in which the MNCs’ activities were conducted. It is neither possible nor pertinent to review all these applications in this chapter; instead, some typical studies are presented here, which may provide some further implication when the theory is applied to construction industry.

Table 3.5 Eclectic paradigm: applications in non-construction sectors Economic

sectors/ subjects of study

Description Country/regions References

Manufacturing sector

Application of IDP model From Hong Kong

Lee, et al (1998) Manufacturing

and service sector

Application of the paradigm From US Riahi-Belkaoui (1999)

Service sectors Application of the eclectic paradigm

Application In Malaysia Ramasamy, B.

(1999) Financial sector Examine the finance-specific

factors within OLI paradigm

From developed countries

Oxelheim, et al (2001)

SMEs Application of OLI paradigm on the study of SME from Swiss

From Swiss Hollenstein (2002) FDI and MNCs Application of the eclectic

paradigm In Sub−Sahara

Africa

Anthony (2002) Financial sector Extension the paradigm to explain

the foreign portfolio investment

An application In Latin America Grosse (2003)

International franchisers (23 firms)

Choice of entry modes using franchising approach, an application of the envelope version of the eclectic paradigm

From UK and US

Pak and Beldona (2003)

Banking sector Application From Italy Piscitello (2003) E-commerce

sector

Extension of OLI paradigm and IT implication in MNCs

Global perspective

Dunning, and Wymbs (2003) (Not applicable) Theoretical extension of OLI to

OLMA (ownership, location, mode of entry and geovalent adjustment)

(Not applicable) Guisinger (2003)

Manufacturing sector

Application of OLI model and

extension of L advantages From US Eden, et al (2003) Advanced

Technology Program

Application of OLI model with spatial dimensions

In US Spender (2003)

Extralegal enterprise (XLE)

Application of OLI paradigm on the issue of illegal drug trading in US

In US Mudambi and

Paul (2003) Note: “From xxx country/region” refers that the study focuses on the MNCs from xxx country, i.e. the nationality of the MNC and its home country; while “In xxx country/region” refers that the study focuses on the activities of MNCs which were conducted in xxx country, i.e. the host country.

FDI and MNCs’ activities

To analyze FDI and MNCs’ cross-border activities is the primary intention of the creation of eclectic paradigm. Recently, the application and extension of the paradigm in this aspect is no longer to be restricted in the studies of the FDI and MNCs from developed countries or operating in developed countries. Following the eclectic paradigm, Anthony (2002) provides an empirical assessment of the factors that significantly influence the long run transnational corporations' investment decision making process in Sub-Saharan Africa. The study suggests that the most dominant long run determinants of FDI in Sub-Saharan Africa are market growth, export orientation policy and FDI liberalization. These are followed by real exchange rates and market size. Groose (2003) applied the eclectic paradigm to empirically analyze the 25 largest MNCs from various countries operating in Latin America. He suggested that the eclectic paradigm offered a very useful perspective on FDI patterns during the second half of the 20^th century.

Ramasamy (1999) extended the OLI paradigm by incorporating two other factors, namely reversibility and delayability in the behavioral issues, to explain the behavior of foreign investors interested in investing in Malaysia. The paper analyzed the changing nature of sectoral FDI and links this to the reversibility and delayability factors. He found the evidence of the delayability aspect of FDI under uncertainty and the irreversibility of such investment in Malaysia.

Manufacturing sectors

MNCs from manufacturing sectors are always the major components in international market. Riahi-Belkaoui (1999) adopted the eclectic paradigm in the study on international manufacturing firms from the US. His study incorporated the firm behavioral considerations and validated the OLI paradigm by identifying the significant O, L, and I advantages of the firms. Eden et al (2003) studied the US manufacturing MNCs over the 1990-1994 period using moderated multiple regression analysis using the OLI framework, and further extended and decomposed L into three components and two measuring depth and a third breadth. He also found that O and L advantages both independently and interactively affect MNCs performance and the multinationality are positively related to financial performance.

Lee et al (1998) is one of the few empirical studies using the economic development path model. It studied the globalization of Hong Kong manufacturing industries on the basis of a survey and structured interviews. The results are analyzed in the light of the well-established models of national economic development including Dunning’s IDP model. It is concluded that the manufacturing sector is as important as the service sector

for the stability and growth of Hong Kong and that Hong Kong's manufacturing sector needs to rapidly acquire greater technological sophistication.

Financial and banking sectors

The application and extension of the eclectic paradigm in financial and banking sectors are perceived in a number of literatures due to the rapid development and the increasing importance of the cross-border financial activities in recent decade.

Oxelheim et al (2001) enriched the OLI paradigm by incorporating the finance-specific factors as drivers of FDI. The paper suggests that financial strategies involving factors such as debt/equity swaps or equity-listings in foreign equity markets affect the firm’s relative cost and availability of capital, and motivate a firm’s engagement in FDI. The large MNCs, as the predominant resident in the US, UK, Japan or other liquid markets, have no restrictions as regards their ability to achieve a competitive cost and availability of capital. Therefore, this study emphasizes the relevance of finance-specific proactive strategies for FDI to occur. Eight testable hypotheses were tested based on the recognition of finance-specific factors as active drivers of value creating FDI. Dilyard (2003) encompassed the foreign portfolio investment (FPI), the counter-part of FDI in international market, into the eclectic paradigm, and a mode of OLE – ownership, locational and externalization advantages – are formulated for the analysis of FPI. By doing this, the eclectic paradigm was extended and the analysis of FDI and FPI were integrated. Various factors influencing the operation of FPI were also identified.

Another application of the eclectic paradigm in banking sector is Piscitello (2003),

where the recent globalization of the Italian international banks was analyzed based on the eclectic paradigm.

Other service sectors

Nachum (1999) applied the eclectic paradigm along with other related theories into various service sectors, including the advertising agencies in the US, the UK and France, the professional service industries in various countries, the Swedish engineering consulting firms, and the Danish and UK management consulting firms. The various ownership advantages of the MNCs, major locational advantages of the home and host countries and the incentives and sources of competitiveness of the firms were identified.

Dunning and Wymbs (2003) analyzed the challenges in the existing international business networks brought by the rapid application of IT. The influences of e-commerce in international business as well as the competitiveness of MNCs fostered by the high technology were analyzed using the eclectic paradigm.

Trading related sectors

In Pak and Beldona (2003), the business strategies and competitiveness of the international franchisers were analyzed by the eclectic paradigm. They argued that the OLI paradigm provided a solid framework for testing not only what the companies were trying to take advantages of but also the dynamic learning aspect of the international franchising operations. They concluded that the selection of foreign market entry model could be regarded as a strategic approach to acquiring new knowledge especially for UK franchisers. Mudambi and Paul (2004) focused on multinational activity by

multinational extralegal enterprise (XLEs) in the illegal drug trade, examining the applicability of the OLI paradigm, and they found that the location and internalization aspects of the paradigm apply well, while the ownership aspect does not.

Other applications and extensions

Currently, the application and extension of the eclectic paradigm are featured in diversified business situations and in multidisciplinary economic sectors. Hollenstein (2002) studied the international activities of Swiss-based SME firms with special emphasis on differences by size and sector. The analysis validated the eclectic paradigm, with O advantages being the main drivers, irrespective of firm size, sector and internationalization strategy. However, he also found important differences by firm size:

L advantages foster international activities only in case of SMEs; I advantages are relevant primarily for large firms; application-oriented knowledge and foreign experience are particularly relevant O advantages in case of SMEs, whereas R&D is an O advantage of prime importance for large firms.

Guisinger (2003) theoretically extended the eclectic paradigm’s OLI variables into OLMA model, where ownership (O), location (L), mode of entry (M) and geovalent adjustment (A) explain the principle determinants of MNCs’ performance.

Spender (2003) extended and illustrated the OLI paradigm with three spatial dimensions, and applied it to the Advanced Technology Program in the US. He concluded that the eclectic paradigm is powerful to meet the conceptual needs of business and government decision makers.