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Awards > EIBA Lifetime Achievement Award / Danny Van Den Bulcke Best Paper Prize / Copenhagen Business School Prize / Gunnar Hedlund Award / EIBA Best Doctoral Thesis Proposal in IB Award / MRQ Best Reviewer Prize / IBR Best Journal Paper of the Year Award / JIBE International Trade & Industrial Organization in International Business Prize / EIBA Distinguished Honorary Fellowship

EIBA Lifetime Achievement Award in International Business

EIBA Lifetime Achievement Award presented to John H. DUNNING
– Ljubljana, December 2004

When the EIBA Fellows decided to award John Dunning’s influential contributions to International Business with the first and to date only EIBA Lifetime Achievement Award, the question was raised of organizing an academic session either in Ljubljana or the year afterwards in Oslo. However, John himself thought that there was no particular need for this and wanted to postpone this for another special occasion (like his 80th birthday).

John Dunning received his award during the EIBA 2004  gala dinner in Ljubljana. The EIBA members present gave him a standing ovation that lasted for a full five minutes. John Cantwell gave a short speech on his astute and accomplished academic work, while Rajneesh Narula provided the audience with some insightful observations about the non-academic aspects of working for and with John Dunning.

The description of the following stages of John Dunning’s career are based on his own contribution to the Journal of International Business Studies, 2004, no. 4, entitled "Perspectives on International Business Research: A Professional Autobiography – Fifty Years Researching and Teaching International Business". It describes his career until the 1970s; the remaining decades will hopefully be covered by a fellow colleague at some point in the future.

– Danny Van Den Bulcke


THE EARLY YEARS: The 1950s

John Dunning left school at the end of 1942, worked first in an insurance broker’s office, and then in a Spanish bank in the City of London. Prior to joining the Navy towards the end of World War II, he had sat, and passed, the first part of the Institute of Banker’s Examination, with the full intention of returning to banking as a career, after his naval service. However, this was not to be. In his final years in the Navy he took advantage of a government-sponsored scheme intended to help finance ex-servicemen with their university studies.

Professor Dunning graduated in 1951 at the University College London, and became the research assistant of Professor Allen, who had been asked by the (then) Board of Trade to evaluate the U.K. government’s post-war strategy of siting newly emerging radio and TV plants, in regions of above average unemployment, rather than in locations around London and the southeast where the existing industry was then concentrated. With Douglas Hague, then a young lecturer on the staff of UCL, he visited some 23 factories in Scotland, the northeast of England and Wales. It was his first, but by no means his last, exposure to field research. The findings were later published as an article in the Review of Economic Studies in 1954.

In the summer of 1952, Dunning was offered a lectureship at the University of Southampton in southern England, and one at Adelaide University in Australia; he chose the former. Following his earlier work at UCL, his research program took two main thrusts. The first was in the area of locational economics, and more especially on the role of U.K. government policy in the development of new regional clusters of economic activity. The second, which directly arose from his observations—when visiting mid-Scotland—of the concentration of American owned factoriesin that area, was on the contribution of these and other U.S. affiliates in Britain to post-war U.K. industrial development.

He obtained a Marshall Fund grant to undertake a thorough study of the extent and pattern of U.S. direct investment in the U.K. manufacturing industry, and its effect on indigeneous productivity. This was an ambitious project for a young scholar as it was the first of its kind since Frank Southard had undertaken two similar studies on U.S. direct investment in Europe and Canada in the 1930s (Southard 1931, 1936). With h the help of two research assistants he visited over 150 U.S. subsidiaries and 75 of their suppliers, competitors and customers in the U.K. These subsidiaries, together with 56 others providing data in response to questionnaires, embraced more than 90% of the universe of U.S. manufacturing affiliates in Britain at the time. Though the study did not pretend to offer a theory of FDI, it did attempt to shed light on a different, but no less interesting, issue. Other research around this time had shown that, on average, manufacturing firms in the U.S. recorded a 2½-4 times higher productivity than their U.K. counterparts (Rostas, 1948).

The question that intrigued J. H. Dunning was how far this was due to the superior management, entrepreneurship and technological skills of U.S. firms (what he termed the (nationality of) ownership(O) specific contribution to productivity); and how far did it reflect the superior immobile resource endowments of the U.S. economy (what he called the location (L) specific contribution to productivity). He reasoned that the closer the productivity of U.S. subsidiaries in the U.K. was to that of their parent companies in the U.S., the more Anglo-U.S. productivity differences might be ascribed to the superior O specific characteristics of U.S. firms. If, however, the productivity of the U.S. affiliates was broadly in line with that of their indigenous competitors, then the Anglo-U.S. productivity differences were more likely to be due to the more congenial, but location bound, characteristics of the U.S. economy. In the event, he found that, on average, U.S. subsidiaries recorded a productivity of around three quarters that of their parent companies. This then, suggested that a greater part of the industrial productivity gap between the U.S. and U.K. was due to the superior 0 advantages of U.S. firms. So was born the O and L component of the eclectic paradigm, but the last leg of the tripod had to wait another 18 years. But, the main thrust of the volume was more to do with the effects of inbound foreign direct investment (FDI). Many of the costs and benefits of FDI, as identified by the U.S. and U.K. executives I interviewed, are now commonplace in the literature. Certainly, later in the1960s and early 1970s they were confirmed by several other country case studies.


The 1960s: NEW DIRECTIONS OF TEACHING AND CONSULTANCY

John Dunning’s initial foray into assessing the significance and impact of transatlantic FDI, both widened and deepened in the 1960s, although he also continued to pursue his my interests in industrial and locational economics. In the mid-1960s, he was asked by Brian Reddaway of the University of Cambridge to participate in a major study he was undertaking for the U.K. government on the impact of British outward FDI on the U.K. economy. At the same time, together with his a colleague David Rowan at Southampton University, he did further work on the comparative efficiency of U.S. subsidiaries in the U.K. and their U.K. competitors, for the National Economic Development Office (NEDO)—a U.K. government department.

In 1964, he was appointed to the Foundation Chair of Economics at the University of Reading.

It was the challenge of building a new department—almost from scratch—that tempted John Dunning to move to Reading. He decided to concentrate the research interests of the department in the area of applied economics. The strategy proved to be a successful one. During the following decade, the size of the student intake and faculty quadrupled and as a result of new programmes; Reading was raised in the pecking order of U.K. Economics Departments.

In the Spring of 1968, he was invited by Grant Reuber, then Head of the Department of Economics at the University of Western Ontario (UWO) to spend a sabbatical year in Canada. This was at the warm recommendation of Harry Johnson, whom John Dunning regarded very much as his mentor at the time. Two other doyens of international economics—Charles Kindleberger and Raymond Vernon—and by Austin Robinson, then, President of the International Economics Association asked him me to prepare papers for conferences they were organising, the first two in the U.S. in the spring of 1969 and the third in the Algarve, Portugal, in the fall of that year. In the event, these conferences played a critical role in the formation of Dunning’s ideas. The one organized by Kindleberger at MIT in Cambridge, and subsequently published as a book (Kindleberger, 1970), was probably the first on the economics of the multinational enterprise—or international corporation as it was then called. The Vernon conference, held in New York at the National Bureau of Economic Research focused on the role of technology in international trade. By asking him to look at the extent and ways in which direct investment in the U.K. had fashioned the (post-war) technological development in the U.K., Vernon steered John Dunning’s thoughts to examining, in more depth, the knowledge-based advantages of the U.S. and U.K. economies, and the way in which these were internalized by U.S. and U.K. firms, and then transferred—by way of FDI and licensing arrangements—across the Atlantic. His contribution for the IEA Conference, which centered on the impact of transatlantic FDI on the economic development of the U.S. and Western European economies in the 19th and 20th centuries. His stay in North America and his contacts with the leading researchers during this period greatly enriched, according to John Dunning his understanding on the determinants of FDI and of how the foreign affiliates of MNEs impinge on the productivity and growth of their indigenous competitors. He put together some papers he had written in the 1960s, into a book entitled Studies in International Investment (Dunning, 1970). This was the first of seven volumes of his essays that Allen and Unwin later Unwin Hyman, and later still Routledge have published, and which trace the evolution of his thoughts and writings on international business related topics.


The 1970s: NEW CHALLENGES IN INTERNATIONAL BUSINESS RESEARCH

The 1970s were particularly important in steering John Dunning’s career path into two new directions. The first was the request to serve as the U.K. member on the so-called Group of Eminent Persons, which was set up by the UN Economic and Social Council (UNESOC), to study the impact of MNEs (later to be called transnational corporations [TNCs]) on economic development and international relations. The initiative for this study group was sparked off by ITTs interventionist role into the political affairs of Chile in the late 1960s.

The report of the study group of which John Dunning was one the principal authors, was published in 1974 (UN, 1974) and a Commission on TNCs was set up and supported by a research and secretarial staff of the Center on Transnational Corporations (UNCTC). The task of the Center, which in 1989 became part of UNCTAD, was (and is) two-fold. First, it is to collect and interpret data, and to undertake research on various economic and social aspects of the activities of TNCs, particularly, as these affect developing countries. Second, it is to advise governments of developing countries on how they might best negotiate with TNCs and/or their affiliates, and pursue the appropriate macroeconomic and macro-organizational policies in order to get the maximum (net) benefit from their presence.

Throughout the Center’s existence, J.H. Dunning has been closely associated with many of its activities. In particular, over the past 15 years, he was Senior Economic Adviser to the Director of the Investment and Technology Division of UNCTAD in Geneva, which, under the direction of Karl Sauvant, has been responsible for the publication of the annual World Investment Reports. These are highly valued both by governments and by the international business community for their comprehensive description and analysis of the interaction between TNCs and the economic and social interests of developing countries.

Another major new thrust in his research agenda in the 1970s was to look more closely at the theory of FDI and MNE activity. Up to the early 1970s, my interests had primarily focused on the economic consequences or effects of FDI. He decided to turn to examining its motives and determinants. In the first half of 1976, during a semester’s leave at Boston University in the U.S. He was introduced me to a path breaking paper by J.C. McManus that argued that firms chose to engage in FDI rather than form a non-equity alliance with a foreign firm whenever the (net) transaction costs of engaging in the former form of cross border rent seeking activity were perceived to be lower than those of the latter (McManus, 1972). At the same time, two of his younger colleagues at Reading—Peter Buckley and Mark Casson—were researching along similar lines, as indeed were Birgitta Swedenborg and Nils Lundgren in Sweden, and Jean Francois Hennart in the U.S. Out of their research was born the internalization theory of the MNE, which essentially was (and is) an extension of the Coasian approach to understanding the origin of the firms, but applied to their foreign value adding activities. This was the missing piece of the jigsaw Iprofessor Dunning was looking for. Later in 1976, some he presented the eclectic paradigm (then called theory) of international production (i.e. production financed by FDI) at a Nobel symposium on the International Allocation of Economic Activity, in Stockholm, which was attended by a group of senior economists and economic geographers. To the O and the L dimensions of the competitive advantages of firms and countries, he added the I, also known and quoted as the OLI-paradigm.

Two other events in J. H. Dunning’s academic journey occurred in the 1970s. First, in September 1972, he organized a workshop at the Rockefeller Foundation center at Bellagio, on Lake Como, at which authors contributing to a volume he was editing on "Economic Analysis and the Multinational Enterprise" presented papers about the impact of the growth of MNE-related activity on the received wisdom of various branches of economic thought. The second, and perhaps the more significant, event occurred in 1979, when he was invited to present a paper at a conference on Third World MNEs (probably the first of its kind) at the East West Center in Honolulu. More specifically, he was asked to discuss the relevance of the eclectic paradigm to understanding the emergence of outward FDI from developing countries. Based on some thoughts that Peter Buckley and John Dunning had shared a couple of years earlier about the relationship between the level and significance of inward and outward FDI of countries and their stages of development, he formalised this idea and offered some casual evidence of the ways in which the international direct investment position of countries was related to a number of country specific variables, including GNP per head, economic structure, government policy, degree of openness and environmental risk. Hence the concept of the investment development path (IDP), or cycle as it was then called, was born. This concept was later subjected to more rigorous statistical testing (Dunning, 1981) and further modified and extended in the 1980s and early 1990s (Dunning and Narula, 1996). Over the years, it has proved a popular tool for IB scholars in their understanding of the role inbound and outbound MNE activity can make to the structural transformation of both developed and developing countries.