The value of internationalization

Abstract

PurposeCurrent discussions in the international business community have demonstrated that the focus of MNCs operations tends to be more regional than global. This paper aims to investigate the performance effects of intra-regional and inter-regional strategy among large companies in European countries.Design/methodology/approachThe authors test the research hypothesis on a sample of 25 largest European companies from six regional, as well as global-oriented, industries using the random effects model.FindingsThe authors find that an increase in a firm’s degree of regionalization leads to value enhancement. On the other side, the results reveal that an inter-regional strategy is associated with value discount. Moreover, empirical findings show that the higher the degree of inter-regional expansion the more pronounced is the effect of firm-specific assets related to marketing on performance. Hence, the negative valuation impact of an inter-regional strategy may be attenuated or even overcome through the interplay of inter-regional internationalization and firm-specific assets related to marketing.Originality/valueBy introducing a theoretical framework, the authors discuss the performance effects of regional-oriented and inter-regional-oriented strategies. Furthermore, they investigate the moderating effect of inter-regional expansion on the performance impact of firm-specific assets related to marketing in the case of large companies. Empirically, they test the hypotheses on a sample of large firms for an 11-year period using different measurements regarding the degree of intra-regional and inter-regional expansion.