Stephane J.G. Girod (Said Business School, University of Oxford) Alan M. Rugman (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
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In this paper we examine the network relationships of a set of large retail multinational enterprises (MNEs). We analyze under what conditions a flagship-network strategy (characterized by a network of five partners – the MNE; key suppliers; key partners; selected competitors; and key organisations in the non-business infrastructure) explains the internationalisation of three retailers whose geographic scope, sectoral conditions and competitive strategies differ substantially. We explore why and when retailers will adopt a flagship strategy. The three firms are Tesco and The Body Shop, two U.K.-based multinational retailers, and Moet Hennessy Louis Vuitton (LVMH), a French-based global retailer. We find evidence of strong network relationships for all three retailers, yet they embrace network strategies for different reasons. Their flagship relationships depend on each retailer’s strategic use of firm-specific-advantages (FSAs) and country-specific advantages (CSAs). We find that a flagship strategy succeeds in overcoming internal and/or environmental constraints to cross-border resource transfers, which are barriers to foreign direct investment (FDI). We provide recommendations on why and when to use a flagship-based strategy and which type of network partners to prioritize in order to succeed internationally.
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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
2005-11.