Figuratively applying the objectives scale to the efficiency seeking column of the matrix in order

Efficiency dominating firms will strive to dominate efficiency through the use of patents and copyrights. These firms may attempt to “purchase” the most skilled employees of other companies. A firm embracing efficiency exploitation will enter into a market where there is an abundance of highly productive factors of production and well-established existing linkages that they may take advantage of.

A typical firm in this category will be looking for developed markets where it can establish itself at the lowest possible entry cost by making use of the existing infrastructure and available capacity resources. The existence of IDZ, FTA, and other investor friendly hubs will be considered important by this investor.

Firms seeking access to efficiency will enter into a market where there is an abundance of highly productive factors of production and well-established existing linkages that may be taken advantage of. A typical firm in this category will be looking for established harbours, skilled labour, structured markets and the existence of agglomeration. This form of business will enter into a region at the later stage of the “flying geese pattern”. This type of business is likely to be a very tertiary or high-tech secondary industry where infrastructural developments and institutional capacity are important. Developed markets and a sound social and economic policy structure should be established. (See tables 5.11, 5.12 and 5.13 below.)

The combination of these profiles is purely subjective and dependent on the structural preference of the MNCs. These can be modified to suit many of the circumstances investors may be faced with. For example, a typical investor may have multiple agendas, and depending on his mission objectives or the structure of the business, he may fall into more than one of these categories at any point in time.

Table 5.11: An overview of the efficiency dominance objective as used in the decision- making model

Efficiency Dominance

Attitude Towards Behaviour

The firm may wish to dominate the factors of production that may be responsible for the efficient production or service feature of a company. A company may therefore strive to buy the experienced management teams from other companies, control the rail networks or ports, or combine with other companies to make this happen.

Operation Host/Export

Oligopolistic, monopolistic, host, export,

Subjective

Norm _{Conglomeration}

Layer

Economic Macro/Micro

Requires a sound internal and external monetary environment, transparency in fiscal and monetary policies

Geo-Political Climate

Political stability

Social Factors Depends on company

Perceived Behavioural Control

Geographic Good infrastructure, dependence on type of operation

Risk S/N/A Risk adverse

Relevant Risk Coping Strategy Management structure Establishment Time Short run Time Horizon Investment Time Short run

Table 5.12: An overview of the efficiency exploitive objective as used in the decision- making model

Efficiency Exploitation

Attitude Towards Behaviour

This kind of operation establishes itself in a region where it may derive benefits from the free rider issue, or in a region where the available resources are less costly,and more abundant.

Operation Host/Export Competitive, host Subjective Norm Conglomeration Layer

Fusion, layers 2 and 3

Economic Macro/Micro

Good microeconomic and macroeconomic environment, sound internal and external economic climate

Geo-Political Climate

Stable political environment

Social Factors Stable

Perceived Behavioural Control

Geographic Efficiency orientated near markets

Risk S/N/A Risk neutral

Relevant Risk Coping Strategy Management Establishment Time Short run Time Horizon Investment Time Long run

Table 5.13: An overview of the access to efficiency objective as used in the decision- making model Access to Efficiency Attitude Towards Behaviour

This is probably the most competitive of the firms investigated. These companies depend on access to efficiency in the region where it invests.

Operation Host/Export Competitive, host Subjective Norm Conglomeration Layer Fusion, layer 3 Economic Macro/Micro

Very stable internal and external economic climate. Transparent and stable microeconomic and macroeconomic economies, fiscal and monetary considerations are important.

Geo-Political Climate

Stable, transparent, free

Social Factors Stable, liberated

Perceived Behavioural Control

Geographic Dependent on company strategy

Risk S/N/A

Risk seeking/neutral

Relevant Risk

Coping Strategy

Time, innovative, management

Establishment Time Short run Time Horizon Investment Time Short run 5.8 Conclusion

The aim of this chapter is to model a theoretical investor decision-making process by looking specifically at the foreign investor’s intentionality to invest and to explain the decision-making model using intentionality as the predictor of behaviour. It is proposed that the behaviour of the foreign direct investor is determined via intentionality by the investor's attitude towards the behaviour, subjective norm, perceived behavioural control, attitude

towards risk and the investor's time horizon. By using some bold level of interpretation of those factors as proposed by Dunning's eclectic approach, and the traditional investor determinants, nine investor objectives are established, which can be mapped into different categories of investor decision-making models. The cognitive-interpretive approach rests upon four long-standing assumptions.

Firstly, it is assumed that activities and structures of organisations are determined in part by the microeconomic monetary actions of their members.

Secondly, it is assumed that such actions are based upon an information processing sequence in which individuals attend to cues in the environment, interpret the meaning of such cues, and then externalise interpretations via concrete activities.

Thirdly, it is assumed that “meaning” is problematic. Individuals must actively construct an interpretation by linking received cues with well-learned and/or developing cognitive structures.

Fourthly, individuals are assumed to possess a reflective capability such that they are able to verbalise at least the contents of their interpretations if not the process through which such interpretations were generated. These four assumptions portray human activity as an ongoing input-output cycle in which subjective interpretations of externally situated information becomes objectified via behaviour.

Using this as the basis of the discussion, the concept of the matrix is introduced. The matrix is a profile of nine investor types constructed from Dunning's (eclectic) OLI theory (ownership, location and internalisation) and the classical determinants of foreign direct investment (market seeking, resource seeking and efficiency seeking).

This matrix provides a platform from which foreign direct investment should be analysed. The investor types range from perfect to imperfect competition, and provide a sketch examining how an investor could enter the emerging market as a highly competitive firm and develop into a firm that is dominant by nature.

Intentionality is not the behaviour. However, as opportunity presents itself, the intent becomes behaviour. Using investor intentionality, it becomes possible to map and predict the motivation behind FDI and the direction of FDI. This model also shows many more benefits of FDI that have become scattered through the many approaches applied to date. A model of intentionality is constructed by using Ajzen's model that consists of behavioural beliefs, normative beliefs and control beliefs. In this model risk factors and time issues are added to bring it in line with the foreign investor.

However, intentionality only becomes behaviour when the opportunity presents itself, and therefore an opportunity recognition model is discussed in line with this model. In considering intentionality as the context, each of the nine investor objectives are defined according to the intentionality objectives, namely attitude towards behaviour, subjective norm, perceived behavioural control, relevant risk and time horizon. Additional terminology is applied to the model, namely layers and fusion. The behavioural model is then applied to each of the nine investor types to establish possible shifts in the pattern of foreign direct investment.

Chapter 6