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ppening on a step-by-step basis, rather than through large initial foreign investments (Johanson, Vahlne, 1977). The internalization process was found to have a few key features. The firm started with gaining experience from the foreign markets by exporting to nearby countries, then gradually moving to more distant countries. With increased volumes, sales subsidiaries are established. The last stage is to establish own production in the country, such as a greenfield investment.

The internalization theory has been examined in several works, such as Dunning (1977), Rugman (1986), Casson (2000) and Henisz (2003). The internalization theory is found to be a superior explanatory tool, but with a few shortcomings. The main issue found by Henisz was FDI flows to areas dominated by a few MNCs not occurring in the predictions of the model. He states that 'the theory must be expanded to include institutional idiosyncrasies'.

OLI Eclectic paradigm OLI折衷范式
One of the most influential findings in regard to international production was John Dunnings OLI Eclectic paradigm (Dunning, 1977). The model is used to explain the motives behind FDI. He found that three advantages must be present in order for FDIs to occur, namely Ownership (firm specific assets or resources), Location (characteristics of a specific country) and Internalization (ability to internalize the ownership and location advantages).

His findings concluded that a company with a competitive advantage over companies from another country has an ownership advantage (O). These advantages are often defined as having access to firm-specific, income-generating assets exclusively held by that company. These assets could be technology, capital, knowledge, etc. (Dunning, 1977). The localization advantage (L) comes from the specific characteristics of a country, where the company believe that its business would be more profitable. If such advantages are found in a country, the company will establish production the country instead of exporting or licensing to foreign firms. The country specific advantages include factors such as natural resources, infrastructure, labor costs and government policy (Dunning, 1977). The third advantage needed for FDI is the internalization advantage (I). In order for a firm to exploit its advantages in the foreign country, it must be able to internalize its ownership advantages in order to operate efficiently in the foreign environment. The main point stated is that a company is better of exploiting its knowledge and assets internally rather than turning to an external part (Dunning, 2001), as keeping processes internal gives the company advantages by having control of its business, market and brand image.

Motives and Drivers for FDI 外商直接投资的动机和动因
Motives
Behind every investment is a motive. For the sake of understanding why a company chose to invest in foreign countries, a model used by Dunning (1993) will be used. According to him, FDI can be segmented into four different types, with a specific motive behind each.

Market-seeking FDI - the reason behind an investment here is due to the size of a specific market and as well as its future growth potential. In addition, advantages such as being closer to the market, hence obtaining better market knowledge as well as closer contact with customers and suppliers.

Resource-seeking FDI