Does the regional nature of multinationals affect multinationality and performance relationship?

Faculty of Business, Brock University, 500 Glenridge Avenue, St. Catharines, Ontario L2S 3A1, Canada
International Business Review (Impact Factor: 1.51). 10/2010; 19(5):479-488. DOI: 10.1016/j.ibusrev.2009.02.012


The traditional independent variable in the multinationality and performance literature is the ratio of foreign (F) to total (T) sales, (F/T). This can now be supplemented by a new regional variable, the ratio of regional (R) to total (T) sales, i.e. (R/T). Data are presented on both (F/T) and (R/T) for both sales and assets for a 5-year period, 2001–2005. New tests are reported on (R/T) as it affects a financial measure of performance, the Tobin’s Q. Implications are drawn for future research on the S-curve relationship between multinationality and performance in the light of this regional phenomenon.

12 Reads
  • Source
    • "The correlations among the various measures of regional concentration are to be expected but are not of concern as these variables are used in separate models. Following Qian et al. (2010) and Rugman and Oh (2010), we estimate pooled regression models that include country and time dummies to control for country-and time-specific effects using ordinary least squares (OLS). We ran regression models based on sales, outlets and sales area respectively. "
    [Show abstract] [Hide abstract]
    ABSTRACT: Drawing on regional strategy theory we complement the core effect of firm-specific advantages on the performance of multinational enterprises with an analysis of the performance consequences of home region concentration on firm performance. We also develop hypotheses regarding the effect of foreign entry timing, internationalization speed and international experience on the performance effect of home region concentration. We test our hypotheses against unique longitudinal data from a panel of 128 multinational enterprises in the retail sector whose geographical spread of international activities we traced between 1995 and 2010. Our findings support the predictions of regional strategy theory and highlight the importance of foreign entry timing and internationalization speed in strengthening the positive effect of home region concentration on the performance of multinational enterprises.
    British Journal of Management 01/2014; DOI:10.1111/1467-8551.12013 · 1.52 Impact Factor
  • Source
    • "Recent studies found the curvilinear relationship between multinationality and the MNC's financial performance (Geringer et al., 1989; Hitt et al., 1997; Lu and Beamish, 2001; Mauri and Sambharya, 2001; Contractor et al., 2003; Ruigrok and Wagner, 2003; Lu and Beamish, 2004; Rugman and Oh, 2010). The curvilinear relationship is largely caused by the fact that MNCs have different degrees of geographical dispersion with regard to regionally or globally distributed sales (Rugman and Oh, 2010). In addition to the degree of internationalization, the degree of geographical dispersion is another important dimension of the MNC's multinationality. "
    [Show abstract] [Hide abstract]
    ABSTRACT: This study focuses on the innovative performance implications of large MNCs' regional and global technological knowledge search strategies. In networked MNCs, the parent can still offer valuable knowledge to subsidiaries. The parent's and a subsidiary's knowledge becomes complementary if an MNC appropriately adopts a global strategy at the parent level and a regional strategy at the subsidiary level. An analysis of the world's largest firms in the Electrical Equipment industry shows that, in general, a global strategy improves the innovative performance of the MNC. Meanwhile, only the combination of a global strategy at the parent level and a regional strategy at the subsidiary level is positively associated with the innovative performance of the MNC. This study contributes to the literature on networked MNCs and the debate of globalization and regionalization. Managerial implications are discussed as well.
    Industry and Innovation 10/2013; 20(7). DOI:10.1080/13662716.2013.850809 · 0.75 Impact Factor
  • Source
    • "Accordingly, " the liability of intra-regional expansion appears to be much lower than the liability of inter-regional expansion " (Rugman and Verbeke, 2007: 201), which is why regionalization can be the first best solution of a firm's internationalization process (Rugman and Oh, 2010). "
    [Show abstract] [Hide abstract]
    ABSTRACT: Purpose – Recently, studies call for a more nuanced perspective on different internationalization patterns pursued by early internationalizers. These studies argue that most born global firms turn out to be born regional and that the proportion of true born global firms would be overestimated. Moreover, literature claims that the proportion of born global firms increases over time due to macroeconomic trends. The purpose of this paper is to investigate these assumptions by providing a dynamic perspective on the prevalence of different types of internationalization patterns among Canadian small and medium-sized exporters (SMEs). Design/methodology/approach – To empirically examine the ideas above, the authors constructed a unique large-scale longitudinal (1997-2004) dataset. A multinomial logit model is employed to estimate a firm's predicted probability, Ceteris paribus, of choosing different internationalization patterns: born global, born regional, and gradual internationalization. Findings – It is found that born global firms indeed account for a smaller proportion than born regional firms (16 per cent vs 27 per cent). However, evidence is found that born globals and born regionals are increasingly established over time and that macroeconomic factors seem to account for this development, at least partially. Originality/value – Combining a rigorous empirical analysis with a unique large-scale longitudinal dataset, the paper addresses two fundamental research questions in the international entrepreneurship (IE) literature: which internationalization pattern prevails; and if the born global pattern is increasingly established over time. The paper therewith theoretically contributes by comparing the predictive value of different internationalization frameworks (international new venture (INV) framework, stage-models and regionalization hypothesis), toward which there is considerable current debate.
    International Marketing Review 05/2012; 29(5):519 – 535. DOI:10.1108/02651331211260368 · 1.18 Impact Factor
Show more