Home Region Focus and Technical Efficiency of Multinational Enterprise

Elitsa R. Banalieva (), Michael D. Santoro and Joy Ruihua Jiang
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Elitsa R. Banalieva: Northeastern University
Michael D. Santoro: Lehigh University
Joy Ruihua Jiang: Oakland University

Management International Review, 2012, vol. 52, issue 4, No 1, 493-518

Abstract: Abstract The transaction costs economics (TCE) perspective on regionalization suggests that multinational enterprises (MNEs) would experience advantages from regionalization and, hence, greater technical efficiency from a high home region focus (HRF). We extend this TCE perspective by proposing that whether a regional (i.e., higher HRF) or global (i.e., lower HRF) strategy leads to greater technical efficiency depends on the degree of regional integration (i.e., economic and policy) of the MNEs’ home regions. This is the first study in the regional/global strategies literature to analyze the effects of HRF and regional integration (economic and policy) on firms’ technical efficiency performance. We suggest that advantages from regionalization arise when firms align their HRF strategy with the degree of regional integration; disadvantages from regionalization can arise when the two are misaligned. Our empirical analysis on a sample of 645 manufacturing Triad MNEs during 2000–2006 provides overall support for our conceptual framework.

Keywords: Transaction cost economics; Technical efficiency; Home region focus; Regional economic integration; Regional policy integration; Triad multinationals (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11575-011-0127-7

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