John Dunning's eclectic paradigm

John Dunning's eclectic paradigm explains why companies expand internationally by considering three key factors: ownership-specific advantages (like technology or brand strength), location-specific factors (such as resource availability or market potential), and the ability to internalize operations (controlling activities internally rather than outsourcing). When these three elements align, firms are more likely to invest abroad to maximize profits, access resources, or reach new markets. The model helps understand international business decisions by highlighting that successful foreign investment depends on a combination of company strengths, favorable local conditions, and the benefits of internal control.