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A Perspective on Regional and Global Strategies of Multinational Enterprises

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Listed:
  • 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

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.

Suggested Citation

  • Alan M. Rugman & Alain Verbeke, 2004. "A Perspective on Regional and Global Strategies of Multinational Enterprises," Working Papers 2004-19, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  • Handle: RePEc:iuk:wpaper:2004-19
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    References listed on IDEAS

    as
    1. Alan M Rugman, 1976. "Risk Reduction by International Diversification," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 7(2), pages 75-80, June.
    2. 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;Academy of International Business, vol. 34(2), pages 125-137, March.
    3. 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;Academy of International Business, vol. 23(4), pages 761-771, December.
    4. Rugman, Alan & Girod, Stéphane, 2003. "Retail Multinationals and Globalization:: The Evidence is Regional," European Management Journal, Elsevier, vol. 21(1), pages 24-37, February.
    5. 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.
    6. 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.
    7. 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.
    8. Pomfret, Richard, 2001. "The Economics of Regional Trading Arrangements," OUP Catalogue, Oxford University Press, number 9780199248872.
    9. Alan M. Rugman & Alain Verbeke, 2003. "Multinational enterprises and public policy," Chapters,in: The New Economic Analysis of Multinationals, chapter 7 Edward Elgar Publishing.
    10. J H Dunning & G Norman, 1987. "The Location Choice of Offices of International Companies," Environment and Planning A, , vol. 19(5), pages 613-631, May.
    11. Bruce Kogut & Nalin Kulatilaka, 1994. "Operating Flexibility, Global Manufacturing, and the Option Value of a Multinational Network," Management Science, INFORMS, vol. 40(1), pages 123-139, January.
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