I Bus 300 Vocab Ch 6

Front 1

agglomeration

Back 1

clustering of economic activites in certain locations

Front 2

bargaining power

Back 2

ability to extract a favorable outcome from negotiations due to one party's strengths

Front 3

contagion (imitation effect)

Back 3

the reaction of local firms to rise to the challenge demonstrated by MNE's through learning and imitation

Front 4

demonstration effect

Back 4

the reaction of local firms to rise to the challenge demonstrated by MNE's through learning and imitation

Front 5

dissemination risk

Back 5

the risk associated with with unauthorized diffusion of firm-specific know-how

Front 6

Downstream vertical FDI

Back 6

a type of vertical FDI in which a firm engages in a downstream stage of the value chain in a host country

Front 7

Expropriation

Back 7

1) government confiscation of foreign assets 2) activities that enrich controlling shareholders at the expense of minority shareholders

Front 8

FDI flow

Back 8

the amount of FDI moving in a given period (usually a year) in a certain direction

Front 9

FDI inflow

Back 9

inbound FDI moving into a country in a year

Front 10

FDI outlow

Back 10

outbound FDI moving out of a country in a year

Front 11

FDI stock

Back 11

totall accumulation of inbound FDI in a country or outbound FDI from a country across a given period (usually several years)

Front 12

Foreign portfolio investment (FPI)

Back 12

investment in a portfolio of foreign securities such as stocks and bonds

Front 13

Free market view on FDI

Back 13

a political view that suggests that FDI unrestricted by government intervention is the best

Front 14

Horizontal FDI

Back 14

a type of FDI in which a firm duplicates its home country-based competencies in foreign countries

Front 15

internalization

Back 15

the replacement of cross-border markets (such as exporting and importing) with one firm (the MNE)locating and operating in two or more countries

Front 16

intrafirm trade

Back 16

international transactions between two subsidaries in two countries controlled by the same MNE

Front 17

knowledge spillover

Back 17

knowledge diffused from one firm to others among closely located firms

Front 18

location

Back 18

advantages enjoyed by firms operating in a certain location

Front 19

management control rights

Back 19

the rights to appoint key managers and establish control mechanisms

Front 20

market imperfection (market failure)

Back 20

the imperfect rules governing international transactions

Front 21

Obsolescing bargain

Back 21

the deal struck by MNE's and host governments, which change their requirements after the intitial FDI entry

Front 22

OLI advantage

Back 22

a firm's quest for Ownership, Location, and Internalization advantages through FDI

Front 23

oligopoly

Back 23

industry dominated by s small number of players

Front 24

ownership

Back 24

an MNE's possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded VRIO assets overseas in the context of FDI

Front 25

pragmatic nationalism on FDI

Back 25

a politcal view that only approves FDI when its benefits outweigh its costs

Front 26

radical view on FDI

Back 26

a political view that is hostile to FDI

Front 27

sovereign wealth Fund (SWF)

Back 27

a state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets

Front 28

Sunk cost

Back 28

costs that a firm has to endure even when its investment turns out to be unsatisfactory

Front 29

technology spillover

Back 29

technology diffused from foreign firms to domestic firms

Front 30

upstream vertical FDI

Back 30

a type of vertical FDI in which a firm engages in an upstream stage of the value chain in a host country

Front 31

Vertical FDI

Back 31

a type of FDI in wchih a firm moves upstream or downstream at different value chain stages in a host country