International Expansion, Diversification and Regulated Firm Nonmarket Strategy

Santiago Urbiztondo, Jean-Philippe Bonardi and Bertrand Quelin
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Jean-Philippe Bonardi: Department of Marketing, Faculty of Business and Economics - UNIL - Université de Lausanne = University of Lausanne

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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: International diversification; regulated firms; lobbying; Regulation; nonmarket strategy; international investments; diversification (search for similar items in EconPapers)
Date: 2013-09-01
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Published in Managerial and Decision Economics, 2013, 34 (6), pp.379-396. ⟨10.1002/mde.2598⟩

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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 (2012)
Working Paper: International expansion, diversification and regulated firms' nonmarket strategy (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00852603

DOI: 10.1002/mde.2598

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