Article

Does the regional nature of multinationals affect the 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; 19:479-488. DOI: 10.1016/j.ibusrev.2009.02.012

ABSTRACT 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.

0 Followers
 · 
67 Views
  • [Show abstract] [Hide abstract]
    ABSTRACT: This paper examines the factors that drive the success of multinational corporations (MNCs) in their pursuit of regional strategies. Based on contingency theory, we develop a comprehensive regional success factor model to investigate the effects of regional management autonomy and regional product/service adaptation on the regional success of MNCs. Using structural equation modelling, we also analyse the interaction effects of regional orientation and inter-regional distance. We evaluate our model by means of both primary and secondary data for Fortune Global 500 firms. Our findings show that appropriate degrees of regional management autonomy and regional product/service adaptation are highly contingent upon contextual influences on MNCs.
    Management International Review 10/2014; 54(5). DOI:10.1007/s11575-014-0220-9 · 0.75 Impact Factor
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: This paper studies the relationship between international diversification and performance in agri-food firms In line with the recent literature, it analyses the effects of the degree of internationalization using a uniform sample, a long-term focus and a measure that combines export intensity and regional diversification. The study empirically confirms the hypothesis of a horizontal S-curve relationship between diversification and performance and identifies three phases. Novice export firms are found in the first stage; their profits are low because they incur in the initial costs of exporting. Mature companies with a more advanced internationalization process are in the second stage; they benefit from the positive outcomes of operating at a larger scale. Lastly, the third stage contains internationally over-diversified companies; their performance decreases as a result of costs to enter extra-regional markets, which are especially steep in this sector, and dealing with greater organisational complexity JEL Classification: F23, L66, Q13
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: The subsidiary is playing an increasingly important role in generating competitive advantage for MNCs. The key objective of this study is to empirically disentangle the underlying causal structure that determines the autonomy of subsidiaries. We argue that the division of decision-making authority between the headquarter and the operational unit primarily responds to the institutional contexts of both, the parent company and the subsidiary. This is because an MNC is a governance structure that operates affiliates in many and widely different institutional contexts. Our propositions are tested on a database that includes 263 European subsidiaries of 18 MNCs in 25 European countries. The empirical results support our institutional perspective and show that the subsidiary's autonomy is strongly associated with the global strategy of the parent firm and the national business system in which the affiliate is embedded. The results hold while controlling for various key characteristics of the parent firm and for the subsidiary.