JOHN DUNNING’S ECLECTIC MODEL AND THE BEGINNINGS OF GLOBAL STRATEGY

Abstract

John Dunning’s Eclectic Model, introduced in 1976 (Dunning, 1977) and refined by him several times since then (1988, 1993), is a key contribution to the separation of international business studies (IBS) from international economics and trade theory and to the development of global strategy. Dunning’s proposed model was preceded by Stephen Hymer’s (1960) application of industrial organization economics to the study of international trade and investment, and Ray Vernon’s (1966) definition of an international product lifecycle, both critical steps for IBS away from macro-economic trade theory. He was contemporaneous with the work of McManus (1972) and Buckley and Casson (1976) that introduced Coasian economics to the study of international markets and multinational firms. He was also working at the same time that Stopford and Wells (1971) began the work that led to much of the modeling of global industries at Harvard University. These and related works were important to the development of IBS. However, these other models tended to take a narrowly defined perspective and therefore to examine only a part of the rapidly expanding phenomenon of the global firm. They also tended toward industry-level analysis. Dunning’s Eclectic Model, however, by its inclusive nature, opened up the study of multinational firms to broader influences from organizational studies and business strategy. Its strong grounding in economic theory provided a basis for further development and for the integration of strategic models based on similar theories, while its focus on firm-level characteristics provided opportunities to incorporate new ideas from organizational studies into the study of international strategy. For this reason, I see it as the key theoretical model in the process of turning IBS from a mix of macro-level theoretical approaches to national differences and case-based analysis of industry effects into theoretically grounded studies of business organizations functioning in extra-national markets. While Dunning himself makes the point that the Eclectic Model is aimed at the study of multinational firms (1988), not at evaluating individual firm decisions, it does provide a framework for both descriptive and normative studies of individual firms. This shift in emphasis brought much new insight to the study of international business and added considerable richness to developing theory in strategic management and other business disciplines. It has also led to the incorporation of IBS into most business disciplines and a concomitant decline in the study of international business as a separate area for scholarly endeavor – a sometimes disconcerting example of the law of unintended effects.

Citation

Tallman, S. (2003), "JOHN DUNNING’S ECLECTIC MODEL AND THE BEGINNINGS OF GLOBAL STRATEGY", Cheng, J.L.C. and Hitt, M.A. (Ed.) Managing Multinationals in a Knowledge Economy: Economics, Culture (Advances in International Management, Vol. 15), Emerald Group Publishing Limited, Leeds, pp. 43-55. https://doi.org/10.1016/S0747-7929(03)15003-2