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      • FRENCH DIRECT INVESTMENT IN AUSTRALIA: AN APPLICATION OF DUNNING'S ECLECTIC PARADIGM

        Amale Scally,Peter J Pope People&Global Business Association 1998 Global Business and Finance Review Vol.3 No.2

        This study has its foundation in Dunning's 'eclectic paradigm' which states that multinationals face a set of three interrelated determinants. These are Ownership-specific advantage, Internalisation-specific advantages and Location-specific advantage (OLI hereafter). This theory is applied to the case of French multinational activity in Australia. An examination of the motives underlying such investments is also included. Results indicate that to a certain extent ownership advantages of French enterprises, their internalisation incentives and the locational advantages of Australia provide valid explanations for the existence of French direct investment in Australia. However, each determinant on its own is a necessary condition for direct investment to occur, but not a sufficient one. The majority of French multinationals surveyed seem to be market-seeking investors, possessing ownership advantages in the form of high quality products or services, marketing and managerial skill as well as superior technology. The Australian market is of interest to French enterprises as it is strategically located in a region characterised by strong economic growth. But it is the great distance which separates Australia and France, and the need to ensure that the ownership advantages (quality and technology) are preserved which encourage French multinationals to invest in Australia rather than to export, license or franchise.

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