📘 OLI Framework | 📅 1970s | 👤 John Dunning

🌍 The Eclectic Theory of Foreign Direct Investment (FDI) (Also known as the OLI Framework)

🧠 Developed by John Dunning

According to this theory of of International Business, the pattern of FDI is determined by combination of Core Competency, location advantage and entry mode. It states that FDI will occur when three advantages are uniquely combined:

1. 🅾️ – Ownership Advantage (Core Competency)

– The firm must possess unique assets like technology, brand, or managerial capabilities that give it a competitive edge.

2. 📍 – Location Advantage

– The host country must offer location-specific advantages like natural resources, skilled labor, favorable regulations, or proximity to markets.

3. 🏢 – Internalization Advantage (Entry mode)

– The firm must find it more efficient to exploit its ownership advantage internally (through FDI) rather than licensing or exporting.

✅ These three elements — Ownership, Location, and Internalization (OLI) — form the core of the Eclectic Paradigm.