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Regional Transnationals and Triad Strategy

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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)

Abstract

In this paper, we address the geographic distribution of sales of some of the world’s largest multinational enterprises (MNEs), with a focus on the share of each leg of the ‘Triad’ (the North-American Free Trade Agreement or NAFTA-zone, the European Union - E.U., and Asia) in these firms’ overall sales. Our view is that a firm has achieved global corporate success only if it is able to earn a balanced regional distribution of sales. Only high actual sales across the globe, especially in the wealthy and technologically advanced triad regions, demonstrate both strong firm-level capabilities at the supply side to market products and services worldwide, and a high willingness of sophisticated consumers at the demand side, to pay for the firm’s output. With respect to the supply side, we develop a new conceptual framework, which distinguishes among the global, regional and national loci of MNE decision-making, as well as the global, regional and national levels of product standardization. Our main point is that the regional dimension is important for many firms, because it is a geographic level where many important decisions are made, and where product standardization may be appropriate. We then identify the twenty MNEs with the highest foreign-to-total (F/T) sales ratios in the UNCTAD list of most internationalized companies in terms of foreign asset base that are also Fortune 500 firms. For this set of large, highly internationalized companies, we measure the distribution of their sales across triad regions. We find that only three of these firms actually have a substantial portion of their sales across all three legs of the triad. The other MNEs are either bi-regional, host-region oriented or home-triad region oriented. In other words, the empirical evidence reveals that even these highly internationalized MNEs do not have a balanced global distribution of sales. We further elaborate on this empirical finding by investigating whether a regional component can be identified in twelve specific cases of MNE strategy, building upon our new framework.

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File URL: http://www.bus.indiana.edu/riharbau/RePEc/iuk/wpaper/bepp2004-20-rugman-verbeke.pdf
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Bibliographic Info

Paper provided by Indiana University, Kelley School of Business, Department of Business Economics and Public Policy in its series Working Papers with number 2004-20.

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Date of creation: 2004
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Publication status: Published in Transnational Corporations, 2004
Handle: RePEc:iuk:wpaper:2004-20

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Related research

Keywords: globalization; regionalization; triad; transnational enterprises; triad home-base; regional; global; bi-regional; Wal-Mart;

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Cited by:
  1. Aggarwal, Raj & Pradhan, Jaya Prakash, 2010. "On the Globalness of Emerging Multinationals: A Study of Indian MNEs," MPRA Paper 24867, University Library of Munich, Germany.
  2. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
  3. Larry Davidson, 2004. "Was Europe a Balancing Force for the Regional Distribution of Exports from the United States?," Working Papers 2004-15, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  4. Sorin-George Toma & Catalin Gradinaru & Saseanu Andreea, 2011. "The Evolution Of Big Businesses At The Global Level In The Period 2008-2010," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 202-206, December.
  5. 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.
  6. Diego Agudelo & Larry Davidson, 2006. "The Gravity of Globalization," Working Papers 2006-15, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.

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