Re-interpreting Ownership Advantages and Re-categorizing Investment Motivations of Multinational Corporations: From the Perspective of Imbalance Theory

Abstract

As opposed to the conventional type of asset exploitation-based foreign direct investment (FDI), this paper illustrates why firms invest abroad based on Moon and Roehls (2001) imbalance theory. Firms invest to complement their disadvantages and enhance their position in international business. Thus, by extending the imbalance theory, this paper shifts our focus on sources of competitiveness from monopolistic asset to complementing capability for firms disadvantages. The complementary capability can be categorized into four, which are agility, benchmarking, convergence and dedication. Based on the perspectives of both exploiting advantages and complementing disadvantages, this paper re-categorizes FDI motivations to factor seeking, demand seeking, related-and-supporting-sector seeking and business context seeking.