Towards a Theory of Regional Multinationals: A Transaction Cost Economics Approach

Alan Rugman and Alain Verbeke
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Alain Verbeke: University of Calgary, Faculty of Management

No 2005-04, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: This paper develops new theory to help explain the recent empirical work that demonstrates the profound lack of global sales, with 320 of the 380 largest firms in the world averaging 80% of their sales within their home region. Transaction cost economics (TCE) concepts are used to explain why large firms adopt regional, rather than global, strategies. A new theory of international management built to explain regional-level strategy and structure is developed. In this, a firm's geographic scope of sales is limited by the predominant regional reach of its firm level capabilities, due to TCE reasons.

Date: 2005
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Citations: View citations in EconPapers (35)

Published in Management International Review, 2005

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