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Regional multinationals and the Korean cosmetics industry

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  • Chang Oh
  • Alan Rugman

Abstract

This paper analyzes the market penetration and expansion strategy of cosmetics and toiletries multinational enterprises (MNEs) in South Korea from the perspective of regional strategy as developed recently by Rugman. We find that MNEs have different market entry and expansion strategies in the home region and in the foreign region. Home region MNEs (Japanese MNEs in this case), in general, utilize their firm-specific advantages (FSAs) better than foreign region MNEs (European and MNEs from the Americas in this case). Due to differences in transaction costs, home region MNEs exploit downstream FSAs while foreign region MNEs develop upstream FSAs. Market similarity also leads to a greater incentive to operate in the home region rather than in foreign regions. The home region effect significantly increases the likelihood of entry into foreign markets as the host country's “diamond” significantly affects the market entry strategies of MNEs. Copyright Springer Science + Business Media, LLC 2007

Suggested Citation

  • Chang Oh & Alan Rugman, 2007. "Regional multinationals and the Korean cosmetics industry," Asia Pacific Journal of Management, Springer, vol. 24(1), pages 27-42, March.
    • Handle: RePEc:kap:asiapa:v:24:y:2007:i:1:p:27-42
    DOI: 10.1007/s10490-006-9008-1
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    Cited by:

    1. Sardor Tadjiev & Pierre-Yves Donze, 2020. "Daewoo Motors (1992-1999)A dragon multinational in the car industry," Discussion Papers in Economics and Business 20-15, Osaka University, Graduate School of Economics.
    2. Oh, Chang Hoon & Sohl, Timo & Rugman, Alan M., 2015. "Regional and product diversification and the performance of retail multinationals," Journal of International Management, Elsevier, vol. 21(3), pages 220-234.
    3. Alain Verbeke & Wenlong Yuan & Liena Kano, 2020. "A values-based analysis of bifurcation bias and its impact on family firm internationalization," Asia Pacific Journal of Management, Springer, vol. 37(2), pages 449-477, June.
    4. Oh, Chang Hoon & Li, Jing, 2015. "Commentary: Alan Rugman and the theory of the regional multinationals," Journal of World Business, Elsevier, vol. 50(4), pages 631-633.
    5. Rojanadilok Rojanadilok & Bunchapattanasakda, 2011. "Marketing Strategies of Imported Herbal Cosmetic Products in Thailand," Information Management and Business Review, AMH International, vol. 3(4), pages 217-221.
    6. Simon Collinson & Alan Rugman, 2007. "The regional character of Asian multinational enterprises," Asia Pacific Journal of Management, Springer, vol. 24(4), pages 429-446, December.
    7. Mike Peng, 2007. "Celebrating 25 years of Asia Pacific management research," Asia Pacific Journal of Management, Springer, vol. 24(4), pages 385-393, December.
    8. Guey-Huey Li & Chwo-Ming Yu & Dah-Hsian Seetoo, 2010. "Toward a Theory of Regional Organization," Management International Review, Springer, vol. 50(1), pages 5-33, February.
    9. Rugman, Alan M. & Oh, Chang Hoon, 2008. "Korea's multinationals in a regional world," Journal of World Business, Elsevier, vol. 43(1), pages 5-15, January.

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