THE APPLICATION OF DUNNING’S ECLECTIC THEORY TO CHINA’S DIRECT INVESTMENT IN INDONESIA’S CONSTRUCTION SERVICE INDUSTRY (CASE STUDY OF FIVE COMPANIES)

Abstract

This study was about the application of Dunning’s eclectic theory to Chinese direct investment in Indonesia’s construction service industry. At present, many Chinese Companies do construction service business in Indonesia. The writer would like to find out how the OLI model influences Chinese Companies to make foreign direct investments, how it shows why the foreign direct investments are made, and what pushed Chinese Companies to make the decision to invests. The writer made this study in Cikarang, Indonesia, with information from the managers of Chinese Companies to help the researcher to obtain useful information for this study. In this research, the writer has taken 60 managers and supervisors who became the respondents to get the useful information. For this study, the researcher made use of questionnaires to collect the information from the managers and supervisors of Chinese Companies. Subsequently, the researcher took the advantage of weighted mean to analyze the data. Based on the previous research and this present research, the writer knows that ownership advantage becomes the dominant factor that influence the Chinese Companies to make the decision for the foreign direct investment in the construction service industry of Indonesia. Dunning’s eclectic theory can be well applied to the analysis of China’s direct Investment in Indonesia’s construction service industry. The researcher gives some suggestions, firstly, continuously enhance the ownership advantage of the Chinese Company, secondly, make the detailed analysis for location advantage, finally, and enhance the internalization advantage for the company.