ENTR100 Lecture Notes - Lecture 5: Bounded Rationality, Transaction Cost
Document Summary
Recognize current trends regarding fdi in the world economy: globalization result in more fdi, the largest outflow: us, uk, netherlands, germany, japan & Explain the different theories of fdi: entry mode: export: Producing goods at home and then shipping them to the receiving country for sale: licensing: Licensing is the process of leasing a legally protected (that is, trademarked or copyrighted) entity a name, likeness, logo, trademark, graphic design, slogan, signature, character, or a combination of several of these elements. Transaction cost theory: (market imperfections) costs associated with the price as allocation mechanism / costs associated with find/working with a partner in another country. Transaction imperfections - reduce the ability of decision makers to define the price of the transaction. Bounded rationality: finding out information about a possible partner abroad ( The costs of obtaining information and verifying a business partner reputation/ capabilities (both more costly and more time consuming in the international context)
