Host-Home Country Linkages and Host-Home Country Specific Advantages as Determinants of Foreign Acquisitions by Indian Firms

This paper examines the complementarity of country-specific linkages with country-specific advantages in explaining the foreign acquisitions by Indian MNEs by testing and extending further the Eclectic Paradigm. The approach to internationalisation dominated by the Eclectic Paradigm has constantly faced challenges in gaining acceptance as a holistic framework in explaining outward foreign direct investment (OFDI). In 2006 Dunning acknowledged that the role of networks and linkages (Dunning, 2006a). In this paper we explore the view that linkages between host and home country should be included in the Eclectic Paradigm as institutional assets. Country-specific linkages add to richness and improve explanatory power of the Eclectic Paradigm. Linkage variables are shown to be an adjunct to the Eclectic Paradigm, not an alternative to it.