The subsidiaries of multinational enterprises operate regionally, not globally

Multinational Business Review

Volumn 23, Issue 4, 2015, Pages 328-354

  Nguyen, Quyen T K ^a  

^a UNIVERSITY OF READING   (United Kingdom)

Author keywords

ASEAN region; IFRS8 operating segments; New internalization theory; Subsidiary home region strategy; Subsidiary performance

Indexed keywords

EID: 84947288409     PISSN: 1525383X     EISSN: 20541686     Source Type: Journal    
DOI: 10.1108/MBR-05-2015-0017     Document Type: Article

References (108)

1. Aguilera, R.V., Flores, R. and Vaaler, P.M. (2007), “Is it all a matter of grouping? Examining the regional effect in global strategy research”, in Tallman, S.B. (Ed.), International Strategic Management: A New Generation, Edward Elgar, Northampton, pp. 209-228.
2. Aharoni, Y. (2006), “Book review: the regional multinationals MNEs and global strategic management”, International Business Review, Vol. 15 No. 4, pp. 439-446.
3. Anand, J. and Delios, A. (2002), “Absolute and relative resources as determinants of international acquistions”, Strategic Management Journal, Vol. 23 No. 2, pp. 119-134.
4. Andersson, U., Forsgren, M. and Holm, U. (2002), “The strategic impact of external networks: subsidiary performance and competence development in the multinational corporation”, Strategic Management Journal, Vol. 23 No. 11, pp. 979-996.
5. Arregle, J.-L., Beamish, P.W. and Hebert, L. (2009), “The regional dimension of MNEs’ foreign subsidiary localization”, Journal of International Business Studies, Vol. 40 No. 1, pp. 86-107.
6. Asmussen, C.G. (2009), “Local, regional, or global? Quantifying MNE geographic scope”, Journal of International Business Studies, Vol. 40 No. 7, pp. 1192-1205.
7. Asmussen, C.G., Pedersen, T. and Petersen, B. (2007), “How do we capture ‘global specialization’ when measuring firms’ degree of globalization?”, Management International Review, Vol. 47 No. 6, pp. 1-23.
8. Autio, E., Sapienza, H.J. and Almeida, J.G. (2000), “Effects of age at entry, knowledge intensity, and imitability on international growth”, Academy of Management Journal, Vol. 43 No. 5, pp. 909-1014.
9. Banalieva, E.R. and Dhanaraj, C. (2013), “Home region orientation in international expansion strategies”, Journal of International Business Studies, Vol. 44 No. 2, pp. 89-116.
10. Bartlett, C.A. and Ghoshal, S. (1989), Managing Across Borders: The Transnational Solution, Harvard Business School Press, Boston, MA.
11. Bell, G., Filatotchev, I. and Rasheed, A. (2012), “The liability of foreignness in capital markets: sources and remedies”, Journal of International Business Studies, Vol. 43 No. 2, pp. 107-122.
12. Birkinshaw, J.M. (1996), “How multinational subsidiary mandates are gained and lost”, Journal of International Business Studies, Vol. 27 No. 3, pp. 467-496.
13. Birkinshaw, J.M. (1997), “Entrepreneurship in multinational corporations: the characteristics of subsidiary initiatives”, Strategic Management Journal, Vol. 18 No. 3, pp. 207-229.
14. Birkinshaw, J.M. (2000), Entrepreneurship in the Global Firm, Sage, London.
15. Birkinshaw, J.M. and Hood, N. (1998), “Multinational subsidiary evolution: capability and charter change in foreign owned subsidiary companies”, Academy of Management Review, Vol. 23 No. 4, pp. 773-795.
16. Bouquet, C., Morrison, A. and Birkinshaw, J.M. (2009), “International attention and multinational enterprise performance”, Journal of International Business Studies, Vol. 40 No. 1, pp. 108-131.
17. Buckley, P. and Casson, M. (1976), The Future of the Multinational Enterprise, Macmillan, Basingstoke and London.
18. Cantwell, J. and Mudambi, R. (2005), “MNE competence-creating subsidiaries”, Strategic Management Journal, Vol. 26 No. 11, pp. 1109-1128.
19. Capar, N. and Kotabe, M. (2003), “The relationship between international diversification and performance in service firms”, Journal of International Business Studies, Vol. 34 No. 4, pp. 345-355.
20. Caves, R.E. (1996), Multinational Enterprises and Economic Analysis, 2nd ed., Cambridge University Press, Cambridge.
21. Chan, C.M., Isobe, T. and Makino, S. (2008), “Which country matters? Institutional development and foreign affiliate performance”, Strategic Management Journal, Vol. 29 No. 11, pp. 1179-1205.
22. Christmann, P., Day, D. and Yip, G.S. (1999), “The relative influence of country conditions, industry structure, and business strategy on multinational corporation subsidiary performance”, Journal of International Management, Vol. 5 No. 4, pp. 241-265.
23. Delios, A. and Beamish, P.W. (2005), “Regional or global strategies of Japanese firms”, Management International Review, Vol. 45 No. 1, pp. 19-36.
24. Dimitratos, P., Liouka, I. and Young, S. (2014), “A missing operationalization: entrepreneurial competencies in multinational enterprise subsidiaries”, Long Range Planning, Vol. 47 Nos 1/2, pp. 64-75.
25. Dunning, J.H., Fujita, M. and Yakova, N. (2007), “Some macro-data on the regionalization/globalization debate: a comment on the Rugman/Verbeke analysis”, Journal of International Business Studies, Vol. 38 No. 1, pp. 177-199.
26. Eden, L. (2005), “Cave! Hic dragones! Alan M. Rugman’s contribution to the field of international business”, in Verbeke, A. (Ed.), Internalization, International Diversification and the Multinational Enterprise: Essays in Honour of Alan M. Rugman (Research in Global Strategic Management), Elsevier, Oxford, Vol. 11, pp. 9-27.
27. Elango, B. (2004), “Geographic scope of operations by multinational companies: an exploratory study of regional and global strategies”, European Management Journal, Vol. 22 No. 4, pp. 431-441.
28. Estrin, S., Meyer, K.E., Wright, M. and Foliano, F. (2008), “Export propensity and intensity of subsidiaries in emerging economies”, International Business Review, Vol. 17 No. 5, pp. 574-586.
29. Flores, R., Aguilera, R.V., Mahdian, A. and Vaaler, P.M. (2013), “How well do supra-national regional grouping schemes fit international business research”, Journal of International Business Studies, Vol. 44 No. 5, pp. 451-474.
30. Fraser Institute, Vancouver, Canada (2015), “Economic freedom of the world index”, available at: www.fraserinstitute.org/ (accessed 23 April 2015).
31. Ghemawat, P. (2003), “Semi-globalization and international business strategy”, Journal of International Business Studies, Vol. 34 No. 2, pp. 138-152.
32. Ghemawat, P. (2007), Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter, HBS Press, Boston, MA.
33. Grant, R.M. (1987), “Multinationality and performance among British manufacturing companies”, Journal of International Business Studies, Vol. 18 No. 3, pp. 79-89.
34. Grosse, R. (2005), “Are the largest financial institutions really ‘global’?”, Management International Review, Vol. 45 No. 1, pp. 129-145.
35. Hair, J.F., Black, W.C., Babin, B. and Anderson, R.E. (2010), Multivariate Data Analysis, 7th ed., Pearson Prentice Hall, Upper Saddle River, NJ.
36. Hedlund, G. (1986), “The hypermodern MNC: a heterarchy?”, Human Resource Management, Vol. 25 No. 1, pp. 9-35.
37. Hennart, J.F. (1982), A Theory of Multinational Enterprise, University of Michigan Press, Ann Arbor, MI.
38. IFRS8 Operating Segments (2015), available at: http://eifrs.ifrs.org/eifrs/bnstandards/en/2012,/ifrs8.pdf (accessed 26 March 2015).
39. Jensen, M.C. and Meckling, W.H. (1976), “Theory of the firm: managerial behavior, agency costs and ownership structure”, Journal of Financial Economics, Vol. 3 No. 4, pp. 305-360.
40. Jormanainen, I. and Koveshnikov, A. (2012), “International activities of emerging market firms: a critical assessment of research in top international management journals”, Management International Review, Vol. 52 No. 5, pp. 691-726.
41. Kirca, A.H., G. Hult, T.M., Roth, K., Cavusgil, S.T., Perry, M.Z., Akdeniz, M.B., Deligonul, S.Z., Mena, Z.A., Pollitte, W.A., Hoppner, J.J., Miller, J.C. and White, R.C. (2011), “Firm specific assets, multinationality, and financial performance: a meta-analytic review and theoretical integration”, Academy of Management Journal, Vol. 54 No. 1, pp. 47-72.
42. Kobrin, S.J. (1991), “An empirical analysis of the determinants of global integration”, Strategic Management Journal, Vol. 12 No. 1, pp. 17-32.
43. Kolk, A. (2010), “Social and sustainability dimensions of regionalization and (semi)globalization”, Multinational Business Review, Vol. 18 No. 1, pp. 51-72.
44. Kostova, T. and Roth, K. (2002), “Adoption of an organizational practice by subsidiaries of multinational corporations: institutional and relational effects”, Academy of Management Journal, Vol. 45 No. 1, pp. 215-233.
45. Levitt, T. (1983), “The globalization of markets”, Harvard Business Review, Vol. 61 No. 3, pp. 92-102.
46. Li, L. (2005), “Is regional strategy more effective than global strategy in the US service industries?”, Management International Review, Vol. 45 No. 1, pp. 37-57.
47. McGahan, A.M. and Porter, M.E. (1997), “How much does industry matter, really?”, Strategic Management Journal, Vol. 18 No. 1, pp. 15-30.
48. Ma, X., Tong, T.W. and Fitza, M. (2013), “How much does subnational region matter foreign subsidiary performance: evidence from Fortune Global 500 Corporations’ investment in China”, Journal of International Business Studies, Vol. 44 No. 1, pp. 66-87.
49. Makino, S., Isobe, T. and Chan, C.M. (2004), “Does country matter?”, Strategic Management Journal, Vol. 25 No. 10, pp. 1027-1043.
50. Morrison, A.J., Ricks, D.A. and Roth, K. (1991), “Globalization versus regionalization: which way for the multinational?”, Organizational Dynamics, Vol. 19 No. 3, pp. 17-29.
51. Multi Bintang (2015), “Annual report”, available at: www.multibintang.co.id/pdf/MBI_AR13.pdf (accessed 23 April 2015).
52. Nachum, L. and Song, S. (2011), “The MNEs as a portfolio: interdependencies in MNE growth trajectory”, Journal of International Business Studies, Vol. 42 No. 3, pp. 381-405.
53. Nestle Malaysia Berhad (2013), “Annual report of 2013”, available at: www.nestle.com.my/ (accessed 23 April 2015).
54. Nestle Malaysia Berhad (2015), available at: www.nestle.com.my/ (accessed 23 April 2015).
55. Nguyen, Q.T.K. (2013), “Can British multinational enterprises finance economic development in South East Asia”, Multinational Business Review, Vol. 21 No. 2, pp. 122-147.
56. Nguyen, Q.T.K. (2014), “The regional strategies of British multinational subsidiaries in South East Asia”, British Journal of Management, Vol. 25 No. 1, pp. 60-76.
57. Nguyen, Q.T.K. and Rugman, A.M. (2015a), “Internal equity financing and the performance of multinational subsidiaries in emerging economies”, Journal of International Business Studies, Vol. 46 No. 4, pp. 468-490.
58. Nguyen, Q.T.K. and Rugman, A.M. (2015b), “Multinational subsidiary sales and performance in South East Asia”, International Business Review, Vol. 24 No. 1, pp. 115-123.
59. Nocke, V. and Yeaple, S. (2007), “Cross-border mergers and acquisitions vs greenfield foreign direct investment: the role of firm heterogeneity”, Journal of International Economics, Vol. 77 No. 2, pp. 336-365.
60. Nohria, N. and Ghoshal, S. (1994), “Differentiated fit and shared value: alternatives for managing headquarters-subsidiary relations”, Strategic Management Journal, Vol. 19 No. 5, pp. 479-498.
61. Oh, C.H. and Contractor, F. (2014), “A regional perspective on multinational expansion strategies: reconsidering the three-stage paradigm”, British Journal of Management, Vol. 25 No. 1, pp. 42-59.
62. Oh, C.H. and Rugman, A.M. (2014), “The dynamics of regional and global multinationals, 1999-2008”, Multinational Business Review, Vol. 22 No. 2, pp. 108-117.
63. Ohmae, K. (1985), Triad Power: The Coming Shape of Global Competition, Free Press, New York, NY.
64. Osegowitsch, T. and Sammartino, A. (2008), “Reassessing (home-) regionalisation”, Journal of International Business Studies, Vol. 39 No. 2, pp. 184-196.
65. PMMB (2014), “Panasonic Manufacturing Malaysia Berhad, Annual reports”, available at: http://announcements.bursamalaysia.com/EDMS/subweb.nsf/7f04516f8098680348256c6f0017a6bf/e46171fbb1c7803648257d2d0023c64f/$FILE/PANAMY-AnnualReport2014.pdf (accessed 23 April 2015).
66. Porter, M.E. (1990), Competitive Advantage of Nations, Free Press, New York, NY.
67. Prahalad, C.K. and Doz, Y.L. (1987), The Multinational Mission: Balancing Local Demands with Global Vision, Free Press, New York, NY.
68. PT Unilever Indonesia Tbk (2015), “Annual reports, 2009-2013”, available at: www.unilever.co.id/id/Investor-centre/annual-report/index.aspx (accessed 23 April 23).
69. Qian, G., Khoury, T., Peng, M.W. and Qian, Z. (2010), “The performance implications of intra- and inter-regional geographic diversification”, Strategic Management Journal, Vol. 31 No. 9, pp. 1018-1030.
70. Qian, G., Li, L. and Rugman, A.M. (2013), “Liability of country foreignness and liability of regional foreignness: their effects on geographic diversification and firm performance”, Journal of International Business Studies, Vol. 44 No. 6, pp. 635-647.
71. Rosenzweig, P.M. and Singh, J.V. (1991), “Organizational environments and the multinational enterprise”, Academy of Management Review, Vol. 16 No. 2, pp. 340-361.
72. Roth, K. and Morrison, A.J. (1992), “Business-level competitive strategy: a contingency link to internationalization”, Journal of Management, Vol. 18 No. 3, pp. 473-487.
73. Rugman, A.M. (1981), Inside the Multinationals: The Economics of Internal Markets, Columbia Press, New York, NY.
74. Rugman, A.M. (2000), The End of Globalization: Why Global Strategy is a Myth and How to Profit from the Realities of Regional Market, Random House, London.
75. Rugman, A.M. (2005), The Regional Multinationals: MNEs and “Global” Strategic Management, Cambridge University Press, Cambridge.
76. Rugman, A.M. and Bennett, J. (1982), “Technology transfer and world product mandating in Canada”, Columbia Journal of World Business, Vol. 17 No. 4, pp. 58-62.
77. Rugman, A.M. and Collinson, S. (2012), International Business, 6th ed., Pearson, Harlow.
78. Rugman, A.M., Kudina, A. and Yip, G. (2007), “The regional dimension of UK multinationals”, in Rugman, A.M. (Ed.), Regional Aspects of Multinationality and Performance, Research in Global Strategic Management, JAI Press, Greenwich, CT, Vol. 13, pp. 297-315.
79. Rugman, A.M. and Oh, C.H. (2010), “Does the regional nature of multinationals affect the multinationality and performance relationship?”, International Business Review, Vol. 19 No. 5, pp. 479-488.
80. Rugman, A.M. and Oh, C.H. (2013), “Why the home region matters: location and regional multinationals”, British Journal of Management, Vol. 24 No. 4, pp. 463-479.
81. Rugman, A.M., Oh, C.H. and Lim, D.S.K. (2012), “The regional and global competitiveness of multinational firms”, Journal of the Academy of Marketing Science, Vol. 40 No. 2, pp. 218-235.
82. Rugman, A.M. and Sukpanich, N. (2006), “Firm specific advantages, intra-regional sales and performance of multinational enterprises”, The International Trade Journal, Vol. 20 No. 3, pp. 355-382.
83. Rugman, A.M. and Verbeke, A. (1992), “A note on the transnational solution and the transaction cost theory of multinational strategic management”, Journal of International Business Studies, Vol. 23 No. 4, pp. 761-772.
84. Rugman, A.M. and Verbeke, A. (2001), “Subsidiary-specific advantages in multinational enterprises”, Strategic Management Journal, Vol. 22 No. 3, pp. 237-250.
85. Rugman, A.M. and Verbeke, A. (2004), “A perspective on regional and global strategies of multinational enterprises”, Journal of International Business Studies, Vol. 35 No. 10, pp. 3-18.
86. Rugman, A.M. and Verbeke, A. (2005), “Towards a theory of regional multinationals: a transaction cost economics approach”, Management International Review, Vol. 45 No. 1, pp. 5-17.
87. Rugman, A.M. and Verbeke, A. (2007), “Liabilities of regional foreignness and the use of firm-level versus country-level data: a response to Dunning (2007)”, Journal of International Business Studies, Vol. 38 No. 1, pp. 200-205.
88. Rugman, A.M. and Verbeke, A. (2008a), “A regional solution to the strategy and structure of multinationals”, European Management Journal, Vol. 26 No. 5, pp. 305-313.
89. Rugman, A.M. and Verbeke, A. (2008b), “A new perspective on the regional and global strategies of multinational service firms”, Management International Review, Vol. 48 No. 4, pp. 397-411.
90. Rugman, A.M. and Verbeke, A. (2008c), “The theory and practice of regional strategy: a response to Osegowitsch and Sammartino”, Journal of International Business Studies, Vol. 39 No. 2, pp. 326-332.
91. Rugman, A.M. and Verbeke, A. (2008d), “Internalization theory and its impact on the field of international business”, in Boddewyn, J.J. (Ed.), International Business Scholarship: AIB Fellows on the First 50 Years and Beyond (Research on Global Strategic Management), Emerald Group, Bingley, Vol. 14, pp. 155-174.
92. Rugman, A.M., Verbeke, A. and Nguyen, Q.T.K. (2011), “Fifty years of international business and beyond”, Management International Review, Vol. 51 No. 6, pp. 755-786.
93. Scott, W.R. (2002), Institutions and Organizations, Sage Publication, Thousand Oaks, CA.
94. Seno-Alday, S. (2009), “Market characteristics and regionalization patterns”, European Management Journal, Vol. 27 No. 5, pp. 366-376.
95. Slangen, A. and Hennart, J.-F. (2008), “Do foreign greenfields outperform foreign acquisitions or vice versa? An institutional perspective”, Journal of Management Studies, Vol. 45 No. 7, pp. 1301-1328.
96. Stevens, M.J. and Bird, A. (2004), “On the myth of believing that globalization is a myth: or the effects of misdirected responses on obsolescing an emergent substantive discourse”, Journal of International Management, Vol. 10 No. 4, pp. 501-510.
97. Tallman, S. and Li, J. (1996), “Effects of international diversity and product diversity on the performance of multinational firms”, Academy of Management Journal, Vol. 39 No. 1, pp. 179-196.
98. The Heritage Foundation (2015), “Index of economic freedom”, available at: www.heritage.org/issues/economic-freedom (accessed 23 April 2015).
99. Tseng, C.-H., Tansuhaj, P., Hallagan, W. and McCullough, J. (2007), “Effects of firm resources on growth in multinationality”, Journal of International Business Studies, Vol. 38 No. 6, pp. 961-974.
100. Verbeke, A. (2009), International Business Strategy, Cambridge University Press, Cambridge.
101. Verbeke, A. and Greidanus, N.S. (2009), “The end of the opportunism vs trust debate: bounded reliability as a new envelope concept in research on MNE governance”, Journal of International Business Studies, Vol. 40 No. 1, pp. 135-152.
102. Verbeke, A. and Kano, L. (2012), “An internalization theory rationale for MNE regional strategy”, Multinational Business Review, Vol. 20 No. 2, pp. 135-152.
103. Westney, D.E. (2006), “Review of Alan M. Rugman, the regional multinationals: MNEs and ‘global’ strategic management”, Journal of International Business Studies, Vol. 37 No. 3, pp. 445-449.
104. Wooldridge, J.M. (2009), Introductory Econometrics: A Modern Approach, Cengage Learning, Boston, MA.
105. World Bank (2015), “World Bank development indicators”, available at: http://data.worldbank.org/data-catalog/world-development-indicators (accessed 23 April 2015).
106. Yip, G.S. (1992), Total Global Strategy: Managing for Worldwide Competitive Advantage, Prentice Hall, Englewood Cliffs, NJ.
107. Zaheer, S. (2002), “The liability of foreignness, redux: a commentary”, Journal of International Management, Vol. 8 No. 3, pp. 351-358.
108. OneSource, OneSource global business browser database”, Thomson Reuters, Reuters Research Inc. available at: http://custom.onesource.com/BusinessBrowser.aspx (accessed 1 November 2013).