Ownership, Location, Internalization (OLI) Model

The Ownership, Location, Internalization (OLI) Model explains why companies choose to expand internationally. Ownership refers to a company's unique assets or advantages, like brand or technology, that give it a competitive edge. Location pertains to the benefits of operating in specific countries, such as market size or resources. Internalization involves deciding whether to produce and manage these assets within the company or outsource abroad. Companies expand abroad when they possess strong ownership advantages, find favorable locations, and believe managing activities internally is more efficient than licensing or partnering. The model helps explain the strategic reasons behind direct foreign investments.