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A Perspective on Regional and Global Strategies of Multinational Enterprises

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Author Info
Alan M. Rugman (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
Alain Verbeke (University of Calgary, Faculty of Management)

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Abstract

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.

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Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2004-19.

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Date of creation: 2004
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Publication status: Published in Journal of International Business Studies, 2004
Handle: RePEc:iuk:wpaper:2004-19

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Related research
Keywords: Semi-globalization; regional strategy triad; value chain; firm specific advantages; localization; global strategy;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June. [Downloadable!] (restricted)
  2. Alan M Rugman, 1976. "Risk Reduction by International Diversification," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 7(2), pages 75-80, June. [Downloadable!] (restricted)
  3. Buckley, Peter J & Casson, Mark, 1981. "The Optimal Timing of a Foreign Direct Investment," Economic Journal, Royal Economic Society, vol. 91(361), pages 75-87, March. [Downloadable!] (restricted)
  4. J H Dunning & G Norman, 1987. "The location choice of offices of international companies," Environment and Planning A, Pion Ltd, London, vol. 19(5), pages 613-631, May. [Downloadable!] (restricted)
  5. Alan M Rugman & Alain Verbeke, 2003. "Extending the theory of the multinational enterprise: internalization and strategic management perspectives," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 34(2), pages 125-137, March. [Downloadable!] (restricted)
  6. Alan M Rugman & Alain Verbeke, 1992. "A Note on the Transnational Solution and the Transaction Cost Theory of Multinational Strategic Management," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 23(4), pages 761-771, December. [Downloadable!] (restricted)
  7. Alan M Rugman & Alain Verbeke, 1998. "Multinational Enterprises and Public Policy," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 29(1), pages 115-136, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fortanier, Fabienne & Tulder, Rob van, 2008. "Internationalization trajectories - a crosscountry comparison: Are large Chinese and Indian companies different?," UNU-MERIT Working Paper Series 054, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology. [Downloadable!]
  2. Muller, A.R. & Tulder, R.J.M. van, 2005. "Exploring Patterns of Upstream Internationalization: The Role of Home-region ‘Stickiness’," Research Paper ERS-2005-084-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  3. Mike Peng & Andrew Delios, 2006. "What determines the scope of the firm over time and around the world? An Asia Pacific perspective," Asia Pacific Journal of Management, Springer, vol. 23(4), pages 385-405, December. [Downloadable!] (restricted)
  4. Simon Collinson & Alan M. Rugman, 2007. "The Regional Focus of Asian Multinational Enterprises," Working Papers 2007-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
  5. Muller, A.R. & Tulder, R.J.M. van, 2005. "The Search for Synergy between Institutions and Multinationals: Institutional Uncertainty and Patterns of Internationalization," Research Paper ERS-2005-086-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  6. Lei Li & Zhiang Lin & Bindu Arya, 2008. "The turtle–hare race story revisited: Social capital and resource accumulation for firms from emerging economies," Asia Pacific Journal of Management, Springer, vol. 25(2), pages 251-275, June. [Downloadable!] (restricted)
  7. Aguilera, Ruth V. & Flores, Ricardo G. & Vaaler, Paul M., 2007. "Is It All a Matter of Grouping? Examining the Regional Effect in Global Strategy Research," Working Papers 07-0106, University of Illinois at Urbana-Champaign, College of Business. [Downloadable!]
  8. Schmidt, Tobias & Sofka, Wolfgang, 2009. "Knowledge sourcing: legitimacy deficits for MNC subsidiaries?," Discussion Paper Series 1: Economic Studies 2009,09, Deutsche Bundesbank, Research Centre. [Downloadable!]
  9. Sarianna Lundan & Juha Tolvanen, 2008. "Regional and Global Patterns of Internationalisation of Finnish MNEs," Discussion Papers 1170, The Research Institute of the Finnish Economy. [Downloadable!]
  10. 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. [Downloadable!] (restricted)
    Other versions:
  11. Walid Hejazi, 2005. "Are Regional Concentrations of OECD Exports and Outward FDI Consistent with Gravity?," Atlantic Economic Journal, International Atlantic Economic Society, vol. 33(4), pages 423-436, December. [Downloadable!] (restricted)
  12. Alan M. Rugman & Alain Verbeke, 2005. "Towards a Theory of Regional Multinationals: A Transaction Cost Economics Approach," Working Papers 2005-04, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
  13. 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. [Downloadable!] (restricted)
  14. Alan M. Rugman & Alain Verbeke, 2006. "Liabilities of Regional Foreignness and the Use of Firm Level and Country Level Data," Working Papers 2006-17, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
  15. Birkinshaw, Julian & Braunerhjelm, Pontus & Holm, Ulf & Terjesen, Siri, 2006. "Why Do Some Multinational Corporations Relocate Their Headquarters Overseas?," Working Paper Series in Economics and Institutions of Innovation 54, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  16. Cyril Bouquet & Yuval Deutsch, 2008. "The Impact of Corporate Social Performance on a Firm’s Multinationality," Journal of Business Ethics, Springer, vol. 80(4), pages 755-769, July. [Downloadable!] (restricted)
  17. Kaiser, Ulrich & Sofka, Wolfgang, 2006. "The pulse of liability of foreignness : dynamic legitimacy and experiences effects in the German car market," ZEW Discussion Papers 06-70, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  18. Michele Fratianni & Chang Hoon Oh, 2008. "Expanding RTAs, Trade Flows, and the Multinational Enterprise," Working Papers 2008-02, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
    Other versions:
  19. Vaaler, Paul M. & Aguilera, Ruth V. & Flores, Ricardo G., 2007. "New Methods for Ex Post Evaluation of Regional Grouping Schemes in International Business Research: A Simulated Annealing Approach," Working Papers 07-0105, University of Illinois at Urbana-Champaign, College of Business. [Downloadable!]
  20. Alan Muller & Gail Whiteman, 2009. "Exploring the Geography of Corporate Philanthropic Disaster Response: A Study of Fortune Global 500 Firms," Journal of Business Ethics, Springer, vol. 84(4), pages 589-603, February. [Downloadable!] (restricted)
  21. Tobias Schmidt & Wolfgang Sofka, 2005. "Lost in Translation - Empirical Evidence for Liability of Foreignness as Barriers to Knowledge Spillovers," Industrial Organization 0512012, EconWPA. [Downloadable!]
  22. Nessara Sukpanich & Alan M. Rugman, 2007. "Intra-regional Sales, Product Diversity, and Performance in Merchandising Multinationals," Working Papers 2007-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
  23. John Mathews, 2006. "Dragon multinationals: New players in 21st century globalization," Asia Pacific Journal of Management, Springer, vol. 23(1), pages 5-27, March. [Downloadable!] (restricted)
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