OLI 2.0: The OLI Is Dead. Long Live the OLI!

When it comes to the debate on whether the traditional theories of MNE and foreign direct investment (FDI) are adequate to account for the rise of emerging market (EM) MNEs, our stance is that although some EM MNEs do challenge the conventional wisdom, the existing theories are still valuable as they can explain the majority of the EM MNEs; and instead of rejecting them altogether, we should modify, extend and refine them by taking into account those challenging phenomena of the EM MNEs. In this paper, we take on Dunning’s OLI paradigm and present our redefinition effort. In what we call the OLI 2.0 model, we transform Dunning’s original model of ownership-location-internalization advantages into the new model of advantages of ownership, localization, and internalization. We argue this redefined model is more more coherent than Dunning’s eclectice paradigm as a theory of FDI or MNE. We also explain that the various writings of Stephen Hymer, the intellectual father of the IB field, have covered, explicitly or implicitly, most of the ideas of the three elements of our OLI 2.0 model. Therefore, the new OLI 2.0 model can be treated as partly a rediscovery of Hymer’s insights.