Abstract
As we have previously illustrated, in the theoretical foundation of this work, the regional competitiveness of MNCs is influenced by the regional environment-strategy-structure relationship. As illustrated in Fig. 2.5, this consists of the strategic decision-making of regional management and of the regional products/services resulting from the development of FSAs according to the demands of the regional environment. These region-bound company strengths are factors of regional management and regional product/service configurations that: “[…] can contribute to survival, profitability, and growth beyond the geographic scope of a single nation […]” (Rugman 2005b: 50). This relationship of the organizational and strategic effectiveness of MNCs with their regional corporate success has been described to be contingent on contextual influences. More specifically, the regional success factors of MNCs – given by appropriate degrees of managerial decision-making autonomy and regional product/service adaptation – are highly internally contingent upon their regional orientation and highly externally contingent upon the inter-regional distance they face.
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Notes
- 1.
Cf. Chap. 2.
- 2.
As explained in Sect. 3.2.3.3, a formative specification between first-order constructs and second-order variables is generally more meaningful.
- 3.
These relationships illustrate the sphere of the multidimensional construct (Giere et al. 2006: 683), which is comprised of causal (formative) effects between the dimension regional strategy development and its second-order construct regional management autonomy.
- 4.
Cf. Sect. 2.1.2.3.
- 5.
The firms include Wal-Mart from the retail industry, LaFarge of the cement industry, L’Oréal from the cosmetics industry, and McDonald’s of the food services industry (Rugman 2005b: 186, 189, 191).
- 6.
In Fig. 4.2, we used “regional market development” as an abbreviation for “regional market and product/service development”.
- 7.
The MNCs include Toyota, Citibank, Eli Lilly, Procter and Gamble, L’Oréal, Canon, Coca-Cola, and several firms from the chemical and the pharmaceutical industry (Rugman 2005b: 43, 45, 106, 117, 120, 122, 124, 134, 136, 162, 168, 185, 188).
- 8.
Examples of production-related techniques include flexible manufacturing systems, just-in-time manufacturing, and total quality management (Verbeke 2009: 205–206).
- 9.
Cf. Sect. 3.2.2.3.
- 10.
In conformity with the previous chapter, this confirms the more meaningful, formative specification between first-order constructs and second-order variables (cf. Sect. 3.2.3.3).
- 11.
According to our explanations in the previous chapter and in Sect. 3.2.3.3, we do generally assume the more meaningful, formative specification between first-order constructs and second-order variables.
- 12.
These relationships show the causal (formative) effects between the latent first-order variable regional design and its second-order construct regional product/service adaptation, where the dimension regional design forms its higher order variable within the inner model (Chin 1998a: x).
- 13.
Lehrer and Behnam (2009: 282, 284, 291) show that this may be achieved by specific design principles, such as modularity or programmability – where the former decomposes a product into separable components (e.g., standardization of selected car components and regional/local adaptation of others), while the latter reconciles standardization and adaptation for programmable products (e.g., use of standardized software for computers or industrial robots, and regional/local adaptation of their user-specific programming).
- 14.
For example, Volkswagen’s “Fox” in Europe and South America is named “Lupo” in North America (Kulic 2009: 90).
- 15.
Cf. Sect. 3.2.2.3.
- 16.
In conformity with Kobrin (1991: 19) and Mauri and Phatak (2001: 240), Mauri and Sambharya (2003: 35) measure global integration as the inter-subsidiary product/service, or resource, flows – which are estimated by calculating the percentage of total sales that is generated within the firm and across geographic regions. Geographic restrictions to inter-subsidiary product/service flows can be suitably explained by regional product/service adaptations of MNCs, which lead to high intra-regional trade and product/service flows – typical for the regionalization of markets (Rugman 2000: 114; Rugman and Hodgetts 2001: 334) – resulting in moderate levels of global integration.
- 17.
Cf. Sect. 3.2.2.3.
- 18.
Cf. Sect. 5.2.2.
- 19.
Cf. Sect. 2.3.2.1.
- 20.
The MNC’s absorption of its international expansion relates to cross-border organizational learning, the processing of geographically dispersed knowledge by a firm’s management (Cohen and Levinthal 1990: 131–132, 134–135; Rugman 2005b: 75; Vermeulen and Barkema 2002: 641). The extent to which the need for management structures rises, due to an increasing international expansion of MNCs, is shown by the fact that the headquarters of companies with a wider geographical scope tend to be significantly larger (Collis et al. 2007: 394).
- 21.
The fact that a firm’s geographic concentration has a positive influence on its performance – e.g., by means of aggregation advantages from shared resources and capabilities – has also been confirmed for a more restricted geographical space of MNCs at the sub-national level (Molina-Morales 2001: 291).
- 22.
In Fig. 4.4, we utilized “administrative distance” as an abbreviation for “administrative/political/institutional distance”.
- 23.
The regional management activities in their study included regional operational administration and regional market coordination activities – the former represented by regional human resource management (e.g., recruitment practices, career paths), and the latter by the coordination of intra-regional networks (e.g., input-related supply chains or R&D alliances, and output-related distribution keiretsu or retailers) (Collinson and Rugman 2008: 225–226). The fact that these 75 Asian MNCs are highly tied to the political, economic, social context and business infrastructures in their activities, has also been highlighted elsewhere by Rugman and Collinson (2006: 195).
- 24.
This explains why political and cultural sensitivity are considered as important traits of regional managers (Lasserre and Probert 1998: 49).
- 25.
In Tong and Reuer’s (2007: 215–216) findings, the risk-related negative effect on MNC performance is given by the downside risk of international investments, which is found to be an increasing function of the average cultural distance between a MNC’s home base and the host countries of its foreign subsidiary operations.
- 26.
Cf. Sect. 4.1.1.
- 27.
It should be noted that these geographical differences in the extent of competition faced by a MNC may be very different from its degree of its industry competition (Porter 1986: 17). For example, a MNC might be substantially exposed to a region-specific competition of a foreign host region (for example given by regional, or even local competitors), while these regional competitors of the foreign host region might not form part of the core competitors of its industry. Due to the fact that this work focuses on regional success factors of MNCs related to their regional competitiveness, we perceive a MNC’s regional competition as a more relevant control variable than its industry competition. However, while we will not control for industry competition, we will present industry-specific differences for the MNCs of our study (cf. Chap. 6).
- 28.
Due to the complexity of the structural model of this work, the control variables are not explicitly depicted in Fig. 4.6. It should be noted, however, that they are modeled as two additional, exogenous control variables on regional success, each being measured by only one reflective manifest variable (Reinartz et al. 2004: 295) – firm size, or respectively, regional competition.
- 29.
The respective latent constructs and their measurement models have been described in the previous chapter.
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Heinecke, P. (2011). Regional Success Factor Model. In: Success Factors of Regional Strategies for Multinational Corporations. Contributions to Management Science. Physica-Verlag HD. https://doi.org/10.1007/978-3-7908-2640-1_4
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