The eclectic paradigm proposed by Dunning, a model to evaluate foreign direct investment (FDI), indicates that major factors influencing foreign investors' FDI include ownership advantage, location advantage, and internalization advantage. However, the relative importance of the three factors and sub-factors influencing these three factors were unexplained. This study further discusses Dunning's eclectic paradigm by exploring the unexplained portion by establishing an investment decision model through Decision Making Trial and Evaluation laboratory (DEMATEL), Analytical Network Process (ANP), and Multiple Criteria Decision Model (MCDM). Moreover, the research provides three entrance strategies and the evaluation critieria for foreign investors and tested the decision model. Results showed that the three factors all possess interactive effects and selffeedback relationships. Among the 11 evaluation criteria, the political factors criterion is the most important factor affecting FDI, followed by trade agreement and control. In terms of entrance strategy, setting up a subsidiary in China is closest to foreign investors' expected return, thus becoming investors' most favorable strategy.
Relation:
International Research Journal of Finance & Economics 95, pp.173-195
