Local, regional, or global? Quantifying MNE geographic scope
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This paper proposes a multidimensional index of regional and global orientation that can be used in confirmatory studies with econometric methodologies. Unlike extant measures, the index is objectively scaled, and controls for home country orientation and market size differences. The index is shown to be consistent with models of internationalization that incorporate different assumptions about investment choice and global competition. Preliminary results show that large multinationals follow home region oriented internationalization paths, although much of the regional effect reported by previous studies in fact reflects strong home country biases.
Keywordsinternationalization theory measurement issues regional strategy globalization liability of foreignness
I thank Professors Alan M Rugman, Bent Petersen, Alina Kudina, André Sammartino, Tom Osegowitsch, and Torben Pedersen for valuable comments on this manuscript, and Professors Rugman and Alain Verbeke for providing the dataset for the empirical section of the paper. I also acknowledge the support of the Indiana University Center for International Business Education and Research (IU CIBER). I also thank Editor-in-Chief Professor Arie Y Lewin for his guidance, and two anonymous JIBS reviewers for comments that were very helpful in developing the final version of the paper.
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