Global Versus Regional Geographic Diversification Essay

1546 WordsDec 17, 20167 Pages
Global versus Regional Geographic Diversification Recent progresses in the international business literature note down that multinational enterprises (MNEs) have a tendency to be more regional than global, in terms of width and strength of their market covering, and that the majority of their international action is conduct within their home regions. In agreement with the regionalization theory, this suggest that the responsibility of intra-regional expansion is much lower than the responsibility of inter-regional expansion; that is, the LOF is higher if entering into other globe area relation to expanding within the home area. on one hand some studies argue that threat diversification benefits from worldwide expansion are restricted when multinational firms follow concerted regional strategies, due to similarity in economic basics and exposure to common threat factors within the sections. On the other hand, other studies focusing on MNEs which is account a linear positive influence of intra-regional diversification on implementation. According to these studies, cost economies and effectiveness benefits are more probable to occur throughout intra-regional expansion, due to home region resemblances in terms of geography, economics, organizations and policies, and spatial closeness. despite the fact that low to moderate level of inter-regional diversification give up a positive profits to MNEs, higher level of inter-regional diversification consequence in diminishing
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