According to Dunning's Eclectic Theory, firms choose FDI as the mode of entering international market…

According to John Dunning's eclectic (OLI) paradigm, a firm chooses foreign direct investment over exporting or licensing when it has ownership advantages (such as technology or brands), the host country offers location advantages (such as markets, resources or low costs), and internalisation advantages make it better to use those assets within the firm than through market contracts. Statement E stands for this internalisation advantage, so C, D and E are the three OLI factors. Tax and political advantages are not separate elements of the paradigm; so far as they matter, they form part of a country's location advantages.