The article discusses the implications of alliance capitalism for the eclectic paradigm of international production, particularly in the context of multinational enterprises (MNEs). It argues that the increasing porosity of firm, country, and market boundaries necessitates a reevaluation of the eclectic paradigm to incorporate the competitive advantages arising from inter-firm transactions, growing interdependencies in intermediate product markets, and the external economies of interdependent activities. The paper highlights the shift from hierarchical capitalism, characterized by centralized control and vertical integration, to alliance capitalism, which emphasizes cooperation and collaboration among firms. This new trajectory is driven by technological advances, globalization, and the need to reduce transaction costs and leverage assets, skills, and experiences. The article suggests that the eclectic paradigm should be expanded to include the role of inter-firm relationships and strategic alliances in shaping MNE activity, and that the concept of location-specific advantages should be broadened to account for the territorial embeddedness of interdependent assets and the spatial integration of economic activities. The paper also emphasizes the importance of governance structures within alliances and networks, and the role of national and regional authorities in influencing the development of localized centers of excellence. Overall, the article calls for a reconfiguration of the eclectic paradigm to better capture the dynamics of alliance capitalism and its impact on MNE activity.The article discusses the implications of alliance capitalism for the eclectic paradigm of international production, particularly in the context of multinational enterprises (MNEs). It argues that the increasing porosity of firm, country, and market boundaries necessitates a reevaluation of the eclectic paradigm to incorporate the competitive advantages arising from inter-firm transactions, growing interdependencies in intermediate product markets, and the external economies of interdependent activities. The paper highlights the shift from hierarchical capitalism, characterized by centralized control and vertical integration, to alliance capitalism, which emphasizes cooperation and collaboration among firms. This new trajectory is driven by technological advances, globalization, and the need to reduce transaction costs and leverage assets, skills, and experiences. The article suggests that the eclectic paradigm should be expanded to include the role of inter-firm relationships and strategic alliances in shaping MNE activity, and that the concept of location-specific advantages should be broadened to account for the territorial embeddedness of interdependent assets and the spatial integration of economic activities. The paper also emphasizes the importance of governance structures within alliances and networks, and the role of national and regional authorities in influencing the development of localized centers of excellence. Overall, the article calls for a reconfiguration of the eclectic paradigm to better capture the dynamics of alliance capitalism and its impact on MNE activity.