Regional Multinationals and the Korean Comestics Industry

Chang Hoon Oh and Alan Rugman

No 2007-11, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: This paper analyzes the market penetration and expansion strategy of cosmetics and toiletries multinational enterprises (MNEs) in South Korea from the perspective of regional strategy as developed recently by Rugman. We find that MNEs have different market entry and expansion strategies in the home region and in the foreign region. Home region MNEs (Japanese MNEs in this case), in general, utilize their firm-specific advantages (FSAs) better than foreign region MNEs (European and MNEs from the Americas in this case). Due to differences in transaction costs, home region MNEs exploit downstream FSAs while foreign region MNEs develop upstream FSAs. Market similarity also leads to a greater incentive to operate in the home region rather than in foreign regions. The home region effect significantly increases the likelihood of entry into foreign markets as the host country’s “diamond” significantly affects the market entry strategies of MNEs.

Keywords: regional strategy; market penetration; cosmetics industry; double diamond; South Korea (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-cse
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Citations: View citations in EconPapers (1)

Forthcoming in Asia Pacific Journal of Management

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Journal Article: Regional multinationals and the Korean cosmetics industry (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:iuk:wpaper:2007-11

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