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Handbook of Research on International Strategic Management

Handbook of Research on International Strategic Management

Elgar original reference

Edited by Alain Verbeke and Hemant Merchant

The Handbook provides an impressive state-of-the-art overview of the international strategic management field as an area of scholarly inquiry. The great strength of the work is the thoughtfulness of the messages conveyed by the expert team of authors.

Chapter 13: A new perspective on the regional and global strategies of multinational services firms

Alan M. Rugman and Alain Verbeke

Subjects: business and management, international business, strategic management


Rugman and Verbeke (2004, 2007a) have demonstrated that most of the world’s largest 500 companies pursue regional, rather than global, strategies. They show that few firms actually have balanced sales across the broad triad regions of Europe, North America and Asia. They define a global firm as a company with less than 50 percent of sales in its home triad region and at least 20 percent in each of the two other triad regions. The typical Fortune Global 500 company averages over 70 percent of its overall sales in its home region of the broad triad, and substantially less than 20 percent of its overall sales in each of the two other regions. Such discrepancy in sales performance is then mostly reflected in regionally adapted strategies and structures (Rugman and Verbeke, 2007b). The home-region orientation of most multinational enterprises (MNEs) implies that the reality of globalization has been vastly exaggerated. Here, we extend Rugman and Verbeke’s (2004, 2007a) regional strategy analysis in two ways, namely by adding the parameter of asset dispersion, and by focusing on the differences, if any, between manufacturing and services industries. First, Rugman and Verbeke’s (2004, 2007a) original data did not address the geographic dispersion of production activities. Yet low sales dispersion could be accompanied by high asset dispersion, for example if MNEs engage in substantial offshoring. MNEs may want to tap into attractive (sometimes low-cost) input markets in host regions, and subsequently import components or finished products for sale in their home region.

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