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"The Relationship between Location-Bound Advantages and International Strategy: An Empirical Investigation"

Fang-Yi Lo, Joseph T. Mahoney, and Danchi Tan


First Author :

Fang-Yi Lo
International Trade
Feng Chia University
100, Wenhwa Rd., Seatwen

886-4-24517250 ext. 4184

Second Author :

Joseph T. Mahoney
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth St.
140C Wohlers Hall, MC 706
Champaign, IL 61820


Third Author :

Danchi Tan
International Business
National Chengchi University
64, Zhi-nan Rd. Sec. 2
Wenshan Taipei 116

886-2-9393091 ext. 81139

Abstract :
This paper examines the impact of location-bound advantage on the internationalization strategy of multinational enterprises (MNEs). The extant research literature suggests that an advantage’s location boundedness may be driven by: the nature of the firm advantage; organiza- tional embeddedness, and environmental embeddedness. We posit that these different drivers of location boundedness exert different impacts on internationalization strategies. Our empirical results reveal that organizational embeddedness lowers the breadth of internationalization of MNEs, and increases the tendency of these firms to employ a global strategy. We also find that MNEs whose advantages are tacit and complex have a lower depth of internationalization and are more likely to expand into culturally similar countries. Finally, our results show that MNEs whose advantages are highly embedded in the home environment tend to adopt a multi-domestic strategy and decentralized organizational structures.
Keywords :
international strategy, location-bound advantages, multinational enterprise
Manuscript Received : 2010
Manuscript Published : 2010
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