International Expansion, Diversification and Regulated Firm Nonmarket Strategy

Santiago Urbiztondo, Jean-Philippe Bonardi () and Bertrand Quelin

No 989, HEC Research Papers Series from HEC Paris

Abstract: Previous studies have shown that regulated firms diversify for reasons that are different than for unregulated firms. We explore some of these differences by providing a theoretical model that starts by considering the firm-regulator relationship as an incomplete information issue, in which a regulated incumbent has knowledge that the regulator does not have, but the firm cannot convey hard information about this knowledge. The incumbent faces both market and nonmarket competition from a new entrant. In that context, we show that when the firm faces tough nonmarket competition domestically, going abroad can create a mechanism that makes information transmission to the regulator more credible. International expansion can thus be a way to solve domestic nonmarket issues in addition to being a catalyst for growth.

Keywords: Regulation; nonmarket strategy; international investments; diversification (search for similar items in EconPapers)
JEL-codes: G00 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2012-12-21
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: International Expansion, Diversification and Regulated Firm Nonmarket Strategy (2013)
Working Paper: International Expansion, Diversification and Regulated Firm Nonmarket Strategy (2013)
Working Paper: International expansion, diversification and regulated firms' nonmarket strategy (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0989

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