Reconciling internalization theory and the eclectic paradigm

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the fit is not perfect. The main reason for misalignment is that Dunning is focused upon outward FDI into host economies, whereas Rugman’s matrix is for firm-level strategy covering MNE activity in both home and host countries

The Regional Nature of World Banking

Of the forty banks included in the world’s largest 500 firms, none operate on a global basis. All but one are heavily dependent on their home region, with an average of 78.3% of their sales being intra-regional. The other bank is European owned but has a majority of its sales in North America, i.e. it is host-region oriented. The insularity of the world’s largest banks is not a sector-specific factor—only nine of the world’s 500 largest firms are global, and the vast majority are like the banks, home-region based.regional, triad, banking, intra-regional, global

Liabilities of Regional Foreignness and the Use of Firm Level and Country Level Data

We are pleased that Dunning et al. (2006) have provided macro (country) level data demonstrating the increased internationalization of many nations over the past decade. We also appreciate their findings lending support to our perspective on the regional nature of world business. Our work was based solely on micro (firm) level data, see Rugman and Verbeke (2004a). Both country level data and firm level data have methodological problems which we attempt to reconcile in this comment. We also address the broader conceptual issues of how to interpret country level versus firm level data.Regional strategy, home region bound firm-specific advantages, liability of regional foreignness, methodology

A Perspective on Regional and Global Strategies of Multinational Enterprises

It is widely accepted that multinational enterprises (MNEs) are the key drivers of globalization. The ultimate test to assess the level of globalization is the actual penetration of markets across the globe, especially in the broad ‘triad’ markets of NAFTA, the European Union and Asia. Yet, data on the activities of the 500 largest MNEs reveal that very few actually operate globally. For 320 of the 380 for which geographic sales data are available, an average of 80.3% of their total sales are in their home region of the triad. This means that the world’s largest firms are not global, but regionally based in terms of breadth and depth of market coverage. Globalization thus reflects a special, and rather unusual, outcome of doing international business, and regional strategies are more relevant than global ones. This has important implications for various strands of mainstream international business research, as well as for the broader managerial debate on the design of optimal strategies and governance structures for MNEs.Semi-globalization, regional strategy triad, value chain, firm specific advantages, localization, global strategy

The Regional Focus of Asian Multinational Enterprises

In recent issues of this journal a debate has raged concerning the appropriate nature of academic research in the Asia Pacific region. In keeping with the expressed desire for both rigor and regional relevance in this research, we wish to demonstrate a strong commonality between the performance of large Asian firms and others from Europe and North America. The large Asian firms mostly operate on an intra-regional basis. It has been assumed that the path to success for Asian firms is globalization, yet we show that the literature supporting this is confined to a handful of unrepresentative case studies.Asian multinationals, regional strategy, internationalization, bibliometric analysis, firm-specific advantages

Regional Strategies of Multinational Pharmaceutical Firms

This paper examines the R&D and strategies of the world’s largest firms in the pharmaceuticals sector and finds a high degree of intra-regional sales. R&D and sales are more concentrated within North America and Europe than in Asia. In addition, the relative size of the U.S. market, compared to other parts of the triad, creates imbalances with respect to R&D, sales and international strategy.

THE CANADA-U.S. FREE TRADE AGREEMENT AND CANADA'S AGRI-FOOD INDUSTRIES

International Relations/Trade,

Multinational Enterprises in the New Europe: Are They Really Global?

Despite a pervasive belief that the world’s largest firms compete globally, the vast majority have most of their sales in their home region. Of the top 500 firms for which regional sales data are available, 118 are from Europe, and they compete predominantly within the European region. On average, 62.8% of their sales are in their home region; only three are global, 8 are host-region oriented and 16 are bi-regional, while 86 are home-region based. To illustrate the four categories, we present case studies of 9 European multinationals — Carrefour, TotalFinaElf, Deutsche Bank, Nokia, Philips, GlaxoSmithKline, L’Oréal Paris, Diageo,and AstraZeneca. We analyze the geographical distribution of their operations and their current structure. We also show that management research is strongly focusedon the special cases of global and bi-regional firms, rather than on the large majority of home-region firms. This implies that managing in the new Europe needs tobe regional, not global.

Firm-Specific Advantages Intra-Regional Sales and Performance of Multinational Enterprises

This paper is an extension of recent work that has examined the intra-regional sales of large multinational enterprises (MNEs). First, we examine the interaction between the performance of MNEs and four proxies for their firm-specific advantages (FSAs). This includes: firm size, knowledge (as represented by R&D), marketing ability, and industry type. We find that FSAs in R&D and service sector type are best exploited within the home region. In contrast, the FSA firm size is better exploited by global and bi-regional firms. Second, we find that a service MNE tends to be more home-region oriented and has a higher proportion of intra-regional sales than a manufacturing firm.firm-specific advantages, intra-regional sales, multinational enterprises, performance, geographic scope, and home region

Towards a Theory of Regional Multinationals: A Transaction Cost Economics Approach

This paper develops new theory to help explain the recent empirical work that demonstrates the profound lack of global sales, with 320 of the 380 largest firms in the world averaging 80% of their sales within their home region. Transaction cost economics (TCE) concepts are used to explain why large firms adopt regional, rather than global, strategies. A new theory of international management built to explain regional-level strategy and structure is developed. In this, a firm's geographic scope of sales is limited by the predominant regional reach of its firm level capabilities, due to TCE reasons.