Re-examining regional borders and the multinational enterprise

Abstract

Purpose – The purpose of this paper is to critically assess the theoretical underpinnings and extant progress of the research on regional multi-national enterprises (MNEs) and offer a blueprint for future research by re-conceptualizing how (regional) boundaries relate to the international diversification of MNEs. Design/methodology/approach – The paper integrates key insights from the theory of the regional MNE and economic geography to re-orient the treatment of regional borders within international business (IB) literature. Findings – The paper suggests that the (L) component within the ownership location and internalization (OLI) paradigm should be disaggregated into continuous “distance effects” and discrete “border effects”. Within this rubric, regional borders represent discrete border effects that generate discontinuities that are permeable, fluid and firm specific. Such reconceptualization opens up avenues for future research and more tightly integrates the research on regional MNEs with other research streams. Research limitations/implications – IB scholars need to make concerted effort to think of regions as one among several parameters in studying the strategy and structure of MNEs. A stronger focus on internal processes and mechanisms elucidating the main drivers of MNEs strategies is needed. Originality/value – The paper offers innovative ways in which future research can advance the study of how regions matter in the internationalization strategy of MNEs.