John Dunning has developed a framework that integrates various strands of explanation of international production. A set of three general and interrelated principals is suggested to be fundamental to understand international production. The three principles are derived from a variety of theoretical approaches, therefore Dunning labels his approach 'eclectic'. According to Dunning, 1980 cited in Dicken, 1992, a company will engage in international production when each of the three following conditions is present.

         1. a company possesses certain specific advantages not possessed by competing companies of other nationalities (ownership-specific advantages); and

         2. such advantages are most suitably exploited by the company itself rather than by selling or leasing them to other companies. In other words, the company internationalises the use of its ownership-specific advantages; and

         3. it must be more profitable for the company to exploit its assets in overseas, rather than in domestic, locations. In other words, location-specific factors play an important part, in combination with internationalisation of ownership-specific advantages, in determining whether or not, and where, overseas production occurs.

   Ownership-specific advantages are assets which are internal to a company, and which the company creates for itself. It could be certain types of knowledge, organisation or human skills and these acquire some proprietary right of use, for example a legally protected right.