Management Decision

Emerald Article: A new framework for global expansion: A dynamic diversification-coordination (DDC) model Hwy-Chang Moon, Min-Young Kim

Article information:
To cite this document: Hwy-Chang Moon, Min-Young Kim, (2008),"A new framework for global expansion: A dynamic diversification-coordination (DDC) model", Management Decision, Vol. 46 Iss: 1 pp. 131 - 151 Permanent link to this document: http://dx.doi.org/10.1108/00251740810846789 Downloaded on: 08-06-2012 References: This document contains references to 52 other documents To copy this document: permissions@emeraldinsight.com

Access to this document was granted through an Emerald subscription provided by UNIVERSITI SAINS MALAYSIA For Authors: If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service. Information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.com With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.
*Related content and download information correct at time of download.

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0025-1747.htm

A new framework for global expansion

A dynamic diversication-coordination (DDC) model
Hwy-Chang Moon
The Graduate School of International Studies (GSIS), Seoul National University, Seoul, Korea, and

A new framework for global expansion 131

Received May 2007 Revised September 2007 Accepted October 2007

Min-Young Kim
Department of Business Administration, University of Illinois at Urbana-Champaign, Champaign, Illinois, USA
Abstract
Purpose The main purpose of this paper is to introduce a comprehensive model explaining the global expansion of rms and to nd out viable strategies for rms to survive global competition. Design/methodology/approach Through the critical review over existing literature, this study rst introduces a new framework explaining the global expansion of rms at the level of functional activities in the value chain, and then empirically tests the predictions of the new framework with data in the motor industry. Findings Empirical ndings conrm the new models predictions. First, each function in the value chain has a unique way of global expansion: the global strategy is suitable for the production function, while the multidomestic strategy is applicable to the marketing function. Second, each function follows a dynamic path of global expansion from domestic to transnational via either global or multidomestic, according to the innate characteristics of corresponding function. Finally, the degree of global expansion of a rm is positively correlated with its nancial performance. Research limitations/implications Focusing on developing a new framework on global expansion, this study utilizes a rather small number of data and, therefore, requires readers discretion when interpreting the results of statistical analyses. Practical implications With the dynamic diversication-coordination model, managers can recognize the level and characteristics of their rms global expansion, not only at the rm level but also at the functional level. This allows managers to establish a global strategy tailored to each function, thus reconciling possible conicts generated from different interests among different functions in the rm. Originality/value First, this article introduces a new perspective of analyzing the global expansion of rms by shifting the level of analysis from the rm level to the functional level where the new framework can reconcile the constant debates on globalization. Second, this article suggests an intuitive and theory-based index measuring the degree of global expansion of rms. Keywords Globalization, Marketing strategy, Functional management, Diversication Paper type Research paper

Introduction Multinational corporations (MNCs) globally expand their operations to take advantages in ownership, location, and internalization (Dunning, 1981, 1988, 2000),
The authors would like to thank anonymous reviewers for their constructive comments.

Management Decision Vol. 46 No. 1, 2008 pp. 131-151 q Emerald Group Publishing Limited 0025-1747 DOI 10.1108/00251740810846789

MD 46,1

132

and try to maximize the benets from global expansion by implementing a series of relevant strategies. Existing constructs and frameworks explaining these strategic processes, however, have shown contradictions. In particular, the constant debates over the validity of globalization have brought fundamental doubts on the existing approaches to the global expansion of a rm. This paper introduces a new framework of global expansion at the level of functional activities in the value chain and suggests a new way of reconciling the confusing debates on the global expansion of a rm. This paper begins with reviewing the existing models on global expansion and then evaluates their relevance by introducing a new construct of functional division to the global expansion of a rm. Based on the evaluation, this paper brings forth a new framework of the dynamic diversication-coordination (DDC) model and empirically tests the validity of the framework with statistical analyses. The results from the empirical analyses support the predictions of the DDC model. First, each function in the value chain has a unique way of global expansion: the Global strategy is suitable for the production function, while the Multidomestic strategy is applicable to the marketing function. Second, in the process of global expansion, each function follows a dynamic path from Domestic to Transnational via Global or Multidomestic, according to its innate characteristics. Finally, the degree of global expansion of a rm is positively correlated with its nancial performance. For clear conceptualization, we employ a typology of global expansion as a metalanguage representing the increasing involvement of a rms activities in global scale. As each typology used interchangeably in the literature such as internationalization, globalization, multinaltionalization, transnationalization, and international diversication is actually introduced for its unique purpose in the specic contexts and, consequently, may focus on certain aspects of the phenomenon more than others, we use global expansion in this study as a neutral typology that encompasses all the intended meanings of the existing terms to avoid any confusion and misinterpretation. Exisiting models on global expansion Among many studies on the global expansion of a rm, the Conguration-Coordination model (Porter, 1986) and the Integration-Responsiveness model (Prahalad and Doz, 1987) are the most popular and empirically supported (Taggart, 1997). Many studies have analyzed the phenomenon with the Conguration-Coordination model (Collis, 1991; Roth, 1992; Roth et al., 1991; Yip, 1992) and the Integration-Responsiveness model (Johnson, 1995; Roth and Morrison, 1990; Rugman and Hodgetts, 2001). Some studies extended the original models by correcting the aws in the models (Harzing, 2000; Moon, 1994; Rugman and Verbeke, 2006) or shifting the level of analysis (Makhija et al., 1997). It is worthwhile to take a look over the details in these models and the histories of the extension for the better understanding of fundamental characteristics of global expansion. Prahalad and Doz (1987) explain the global expansion of a rm with two criteria: Integration and Responsiveness. Integration represents the extent to which a rm integrates its functional activities in global scale. On the other hand, Responsiveness is the level of the adaptation to the local differences in customer preferences. The Integration-Responsiveness model, however, cannot be said to be a general model explaining global expansion, because each of the two criteria has different orientations. As the main benets of integrating activities in the value chain come from the

economies of scales and scope (Benito, 2003; Farrell, 2004; Grant, 1998; Rugman and Hodgetts, 2001), Integration in the Integration-Responsiveness model is rather a production-oriented criterion. Likewise, as the criterion of Responsiveness accesses the level of satisfaction of the customers in various locations (Benito, 2003; Harzing, 2000; Roth, 1992), Responsiveness is also a marketing-oriented criterion. Consequently, the Integration-Responsiveness model is not a general model but a one-sided model with Integration focusing on the production side and Responsiveness on the marketing side. On the basis of the typology of Bartlett and Ghoshal (1989), Harzing (2000) extends the Integration-Responsiveness model and suggests a three-fold typology: Global, Multidomestic, and Transnational. Her analysis using data from 166 subsidiaries of 37 MNCs empirically shows that these three typologies are signicantly different from each other. Her model, however, is not a general one because it is based on the original Integration-Responsiveness model, thus inheriting the aws in the model: though the logic of her argument and the results of empirical tests are remarkable, Harzing (2000) cannot be free from the criticism that each of the two criteria in the model, Interdependence and Local Responsiveness, focuses on production and marketing, respectively, in the same way as Prahalad and Doz (1987). Porter (1986) introduces two criteria of Conguration and Coordination into the explanation of global expansion strategy. Conguration of a rms activities is geographical deployment of each function in the value chain, while Coordination is mutual linkage or integration of the activities performed in different congurations. He argues that a rm can enhance its competitive advantage with optimal combination of the activities in the value chain in global scale. Extending the Conguration-Coordination model, Moon (1994) criticizes the Conguration-Coordination model in two aspects and suggests a generalized framework for global expansion strategy. He criticizes Porters (1986) model in two points. First, Porter mislabels the horizontal axis (Conguration). The horizontal axis should measure the number of countries (one through many), not Conguration. Second, as a matter of fact, Porters framework is a specic framework, not a general one, for the same reason that the Integration-Responsiveness model is. He asserts that Porters model is geared toward manufacturing industry, with Conguration on the production side and Coordination on the marketing side. Toyota in 1970s can be a typical example. Therefore, in Porters (1986) model, Conguration is for the production side and Coordination for the marketing side. Like the Integration-Responsiveness model, the Conguration-Coordination model is also one-sided. Recognizing the shortcomings in the Conguration-Coordination model, Moon (1994) extends the model into a generalized one. He argues that both the production side and the marketing side of global expansion should be considered in one model to fully understand the phenomena in global expansion, and shifts the Conguration-Coordination model to a generalized one integrating three criteria into a single framework: number of countries; production coordination; and marketing coordination. The generalized framework is composed of two parts, one for production-seeking global strategies and the other for marketing-seeking global strategies. Comparing the models discussed so far, we can nd three implications. First, the two models, the Integration-Responsiveness and the Conguration-Coordination model, conceptually share same criteria. With consideration of integrating the activities in the

A new framework for global expansion 133

MD 46,1

134

value chain, it is clear that Integration in the Integration-Responsiveness model shares the same characteristics with Coordination in the Conguration-Coordination model. As coordination is to integrate different activities in an organization, they can be used as synonyms (Martinez and Jarillo, 1989). In addition, as Responsiveness is to satisfy the needs of customers in various locations, it can also be understood within the category of Conguration. Therefore, the two models have the same criteria for the implementation of global expansion strategy. Second, each model, however, is focused toward different orientations. As discussed, Integration is on the production side and Responsiveness is on the marketing side, while Conguration is on the production side and Coordination is on the marketing side. Last, the generalized model of Moon (1994) provides a better framework for the explanation of global expansion. Integrating the two different orientations of production and marketing into a single framework, the generalized model can explain the phenomena more comprehensively. Moon (1994)s generalized model, however, is not free from criticism, either. Though the model divides the Coordination criterion in the Conguration-Coordination model into Production Coordination and Marketing Coordination, Number of Countries remains undivided. In general, it is rare for a rm to have exactly the same number of countries for its production and marketing operations. Therefore, to be more precise in understanding the global expansion of a rm, along with Coordination, Number of Countries should also be considered with regard to the production side and the marketing side, respectively: Production Number of Countries and Marketing Number of Countries. In the meanwhile, the concept of Number of Countries actually represents the geographical diversication of a rms activities. Therefore, the term Diversication is suitable to express the intended meaning of Conguration or Number of Countries. As shown in Table I, a new model explaining global expansion of a rm should be equipped with the criteria of Diversication and Coordination in both the production side and the marketing side. The division of Number of Countries in Moons (1994) generalized model, however, would split the model into two different models explaining the global expansion of a
Integration responsiveness model Prahalad and Doz (1987)

Conguration coordination model Porter (1986) Diversication: Pa Conguration Mb z

Extended model Moon (1994) Harzing (2000) Number of countries

New model Production diversication Marketing diversication Production coordination Marketing coordination

z Responsiveness Integration z

z Responsiveness

Coordination: Pa z Table I. Criteria of models explaining global expansion Mb Coordination

Production coordination Marketing coordination

Interdependence z

Notes: a Production; b Marketing

rm in the production side and the marketing side, respectively, because it is Number of Countries that joins the two parts of the model, production-seeking global strategies and marketing-seeking global strategies, into a single framework. To resolve this dilemma, we need a conceptual breakthrough from the fundamental characteristics of global expansion of a rm. In the following section, a new concept of functional division will be discussed. Functional division Level of analysis Each function in the value chain has a different role in the process of a rms global expansion and, consequently, the level of analysis in the study of global expansion of a rm should be the functional level, not the rm level. Porter (1986) insists that each activity in the value chain has a different level of optimal Conguration and Coordination and, therefore, activities in the value chain should be in an appropriate global combination to generate maximum competitive advantage. This implies that competitiveness at the level of a rm comes from the way of deploying and linking the functions in the value chain over the world in consideration of the innate characteristics of each function. Roth (1992) empirically tests Porters (1986) Conguration-Coordination model, and clearly demonstrates that rms coordinate and congure their activities in different patterns rather than all in the same way. Through the selective globalization in which global expansion strategy is dened around a narrow subset of the value chain, a rm coordinates or congures its activities in the value chain globally or locally, according to the nature of the activities. Therefore, he argues that aggregating two dimensions of Conguration and Coordination by setting a total level of Conguration or Coordination cannot fully describe the nature of global expansion of a rm. There are other studies that insist that each function in the value chain has its own characteristics (Porter, 1996). Rugman and Verbeke (2004) expounds that each activity in the value chain has a different level of global expansion. Kim et al. (2003) also argues that each function in the value chain has its unique way of combination for the effective integration. Therefore, we can nd an implication that each function in the value chain has its unique nature that differs from others in the process of the global expansion. Moreover, Roth (1992, p. 546) emphasizes that consistent with the case analyses of Collis (1991), a rm must initially understand its distinctive competences and then build its global strategy around the location-specic and rm-specic advantages developed through the functional activities associated with that distinctive competence. These distinctive competences or core competences can be found in a subset of the value chain (Grosse, 2005; Hitt and Ireland, 1985; Hitt et al., 1982). Consequently, the global expansion strategy should be devised at the level of function in the value chain, not at the level of the rm. Global strategy for production and multidomestic strategy for marketing There have been ceaseless debates on globalization, which have brought fundamental doubts over the validity of the existing models on global expansion. The pros on globalization insist on the benets of the global strategy. On the other hand, the cons argue practicality of the multidomestic strategy. In some cases, globalization is better, while in others multidomestic strategy is more persuasive. A new perspective, however,

A new framework for global expansion 135

MD 46,1

136

reveals interesting ndings. Table II shows the different focuses of the global strategy and the multidomestic strategy. If we regard the term of the production and the marketing as representing the upstream and downstream activities in the value chain (Porter, 1986), the focus of the global strategy mainly falls on the production function, while the main points of the multidomestic strategy are on the marketing function. In addition, the original typology by Bartlett and Ghoshal (1989) also support these ndings in that the main competitive edge of the global strategy comes from economies of scale, cost leadership, and efciency, while that of multidomestic strategy results from differentiation, responsiveness, and tailored products. The former can be classied into the category of production and the latter into the domain of marketing. Furthermore, in his empirical test of Porters (1986) Conguration-Coordination model, Roth (1992) shows that among the ve clusters except the regional federation, the production-related functions are more coordinated than the marketing-related functions, in the given number of countries. In Porters model, the global strategy can be distinguished from the multidomestic strategy by the higher level of coordination. This kind of higher coordination or integration in the global strategy can also be found in the results of Harzings (2000) empirical test, in which the characteristic of the global strategy is described with the focus on the production side, as shown in Table II. From these ndings, we can derive an important implication that there is a clear difference or division among the activities in the value chain in terms of global expansion strategy, and that the Global strategy is suitable for the production function, while the Multidomestic strategy is appropriate for the marketing function. Consequently, we can now nd an answer to the constant debates on globalization. As summarized above, pros and cons of globalization are talking about the same phenomenon from different perspectives. In other words, discussing global expansion, the global strategy and the multidomestic strategy are focusing on the different functions in the value chain. Therefore, the conicts on globalization can be easily resolved by shifting the level of analysis from the rm to the functional activities in the value chain. While contradictory at the rm level, pros and cons on globalization are complementary at the functional level, because they are focusing on the different roles of different functions. Both pros and cons on globalization are right, with their own rationales and domains of explanation. In the functional division approach, the global rms and the multidomestic rms are classied based on the functions in which a rm has its core competence: rms with their core competence focused on the production function are what we call global rms, while others with focuses on the marketing function are multidomestic rms. There is no congenitally global or multidomestic rm. It is decided by the way of deploying and linking functions in the value chain globally. Those who nd their core competence in the production side implement global strategy, while those who get the core competence in the marketing side employ multidomestic strategy. The success of a rm lies in focusing its strategic capabilities on the functions that are the sources of its core competence. Hence, the functional level is a strategic differentiator that decides the corporate strategy for global expansion. Malnight (1995) supports this by arguing that it is at the functional level where globalization takes place, rather than the rm level. From this perspective, it can be easily explained that there are both global and multidomestic rms in an industry.

Studies Global: Levitt (1983)

Main points

Production Product standardization

Focus Marketing

A new framework for global expansion 137

The point of the global strategy is to produce a standardized product globally and to sell them in the same way Hout et al. Economies of scale, (1982) preemptive position, and interdependent managing are more important moves Harzing (2000) The core of the global strategy is to manufacture standardized products with high cost efciency Rugman and Globalization is worldwide Hodgetts (2001) production and distribution of products and services that have a homogeneous type and quality Benito (2003) The global strategy is to achieve worldwide efciency with the lowest cost. Firms implementing the global strategy centralize production Contractor et al. Global standardization (2003) lowers the cost per foreign entry, with which the net benets of foreign expansion can be reaped sooner Farrell (2004) Standardization is crucial in globalization. Global production processes and supply chains can reduce costs and increase revenues Multidomestic: Hamel and Establish a broad product Prahalad (1985) portfolio with numerous product varieties Douglas and International markets are Wind (1987) heterogeneous, not homogeneous Harzing (2000) In multidomestic companies, products are actively modied to meet differing local tastes and preferences

Economies of scale through z global production Standardized products

Same products to all countries

Manufacturing standardized products for world-wide sale

Product standardization

Economies of scale and product standardization

A broad product portfolio Heterogeneous markets Adaptation of marketing to local circumstances Table II. Different focuses of global and multidomestic strategies

(continued)

MD 46,1

Studies

Main points

Production

Focus Marketing Adaptation to regional markets

138

Table II.

Rugman and The global markets do not z Hodgetts (2001) become homogenized. The viable strategy for current MNCs is the one based on Triad or regional block and responsive to local customers Farrell (2004) It can be risky for a rm to z grow through global expansion. Therefore, adapt the best practices of the rm to local differences z Growing diversity in Rigby and consumer segments, Vishwanath constraints on standardized (2006) chain stores, and homogenization of business have forced the retail trade to customize products and stores to local markets

Adaptation to different market conditions

Adaptation to local differences

The functional division takes a critical role in the successful implementation of the global expansion strategy. The existing models, however, analyze the phenomena at the rm level, not at the functional level, without taking the functional division into consideration. Therefore, further discussion to develop a new general model on global expansion of a rm should be equipped with the criteria at the functional level, not at the rm level. DDC model By introducing a new concept of functional division into the model on the global expansion of a rm and its strategy, we can now solve the previous dilemma of dividing Diversication and Coordination into the production side and the marketing side without splitting the single model. The answer of the dilemma is to set the criteria of the model at the level of functional activity, not at the level of the rm. By dividing Diversication and Coordination into the production side and the marketing side at the functional level, we can have a new model that comprehensively explains the phenomena and the dynamic paths of the global expansion of a rm. This dynamic diversication-coordination (DDC) model consists of the following features. Criteria Table III summarizes the criteria of all the models discussed so far. The study of the existing models from the perspective of the functional division shows that a general model should be equipped with Diversication and Coordination with clear division of the production side and the marketing side at the level of function. In the Conguration-Coordination model, Conguration is on production and Coordination is on marketing, satisfying the two categories in Coordination and Diversication. Each

Conguration-coordination model Porter (1986) Harzing (2000) Number of countries

Integration-responsiveness model Prahalad and Doz (1987)

Extended model Moon (1994) DDC model

Diversication: Pa z Responsiveness z Integration z z z z z Responsiveness z

Conguration

Mb

Dc Coordination: Pa

Production diversication Marketing diversication O Production coordination Marketing coordination O O

Mb

Coordination

Dd Functional division:

z z

Interdependence Production coordination z Marketing coordination z O z z

Notes: a Production; bMarketing; cDivision of the production number of countries and the marketing number of countries; dDivision of the production coordination and the marketing coordination

A new framework for global expansion 139

Table III. Variables in models explaining global expansion of a rm

MD 46,1

140

criteria of the Integration-Responsiveness framework, on the other hand, is on the opposite side while satisfying the same categories of Coordination and Diversication: Integration is for production and Responsiveness is for marketing. In the extended models, the model of Harzing (2000) has the same variables with the Integration-Responsiveness framework, thus showing the same results. The model of Moon (1994), on the other hand, extends into both the production side and the marketing side by splitting Coordination into Production Coordination and Marketing Coordination. Number of Countries, however, remains undivided. In addition, there is no consideration of functional division in the model. Therefore, the extended model satises ve out of the seven categories. The DDC model extends Diversication and Coordination into both the production side and the marketing side by taking into account the new construct of functional division, thus having the four criteria of Production Diversication, Production Coordination, Marketing Diversication, and Marketing Coordination at the level of function in the value chain and satisfying all the seven categories in the table. Typologies Harzing (2000) shows that there are three types of global expansion in the previous studies and suggests the typology of Multidomestic, Global, and Transnational. In addition, she argues that the typology of International is not appropriate in the explanation of the global expansion of a rm, because of the confusion in the literature and the difculties in empirical distinction (Harzing, 2000, p. 103). Based on these analyses, the DDC model incorporates the typology of Multidomestic, Global, and Transnational for the explanation of the different types of MNCs, and the typology of Domestic is introduced as a starting point of global expansion where a rm has no international existence. A recent introduction of the new typology called Glocal (Svensson, 2001, 2002; Hung et al., 2007) provides an interesting perspective to the phenomenon. The Glocal strategy, a compromise between the Global strategy and the Multidomestic strategy, argues that MNCs have to maximize the benets from optimizing the balance between standardization of their products in global scale and customization to the different local needs (Svensson, 2001). This insightful strategy, however, is also an eclectic approach at the rm level, not at the functional level, and, therefore, can provide more useful implications if it can incorporate the functional levels of analysis. Three stages in global expansion Based on the previous studies (Bartlett and Ghoshal, 1989; Porter, 1980, 1985), the DDC model divides the global expansion process of a rm into three stages. The rst stage is purely domestic with no international existence, located in the lower left corner of Figure 1 with low Diversication and low Coordination. In this stage, rms implement the Domestic strategy through export and import. From this stage on, rms employ global strategy for the exploitation and exploration of competitiveness. The next stage is the period of trade-off between standardization and customization. Porter (1980, 1985) argues that a rm should not implement cost leadership strategy and differentiation strategy at the same time, because it requires different resources and skills as well as functional differences. Due to the functional difference, i.e. functional division, a function in the value chain cannot pursue Global strategy and Multidomestic

A new framework for global expansion 141

Figure 1. DDC model and conceptual illustration of functional division

strategy simultaneously: as discussed before, the production function implements the Global strategy and the marketing function employs Multidomestic strategy. Global is Coordination-Focusing strategy that focuses the resources of a rm on increasing Coordination, with which it can reap economies of scale (Bartlett and Ghoshal, 1989; Farrell, 2004; Grant, 1998) until the unit cost comes to the minimum efciency scale. At this point lies Global. On the other hand, Multidomestic is Diversication-Focusing strategy that focuses the resources of a rm on expanding geographical diversication until the complex cost (Rommel et al., 1995) rises steeply. At this point lies Multidomestic. In the process of global expansion, it is meaningless to increase Coordination without expanding geographical diversication. If a rm is based in a single country (low diversication), there is nothing to be internationally coordinated (Rugman and Verbeke, 2006, p. 685). Likewise, it is not probable for MNCs to expand geographically without increasing Coordination, because MNCs without coordination behave as local rms in many countries (Tallman and Yip, 2003, p. 334). Therefore the points of Global and Marketing should be located much closer to the center, rather than at the end of the upper left or lower right corner. The nal stage is the period of mutual complementation between Coordination-Focusing strategy and Diversication-Focusing strategy. In this period, the production function and the marketing function pursue both geographical expansion to complement the Coordination-Focusing strategy and the augmentation of Coordination to complement the Diversication-Focusing strategy, simultaneously. This kind of mutual complement has been impossible due to the limited resources available within the rm. Once the rm reaches these points, however, learning and innovation enable the rm to make a strategic leap from the trade-off between the Global strategy and the Multidomestic strategy (Porter, 1996) to the mutual complement of Transnational in which each function can pursue both strategies at a time (Bartlett and Ghoshal, 1989; Benito, 2003). Therefore, there are two inections in the process of dynamic global strategy implementation: the points of Global and Multidomestic. From each point of the inections starts a new pattern of global expansion with a different slope from the past one, complementing the current strategy to move toward Transnational with the help of innovation and knowledge. As an ultimate goal of global expansion, a transnational company achieves global

MD 46,1

efciency and national responsiveness simultaneously by shifting the productivity frontier outward, with which it can overcome the previous trade-off between standardization and customization. Dynamics of global expansion The global expansion of a rm starts from the status of purely Domestic to Transnational via either Global or Multidomestic. Each function in the value chain has its own way of expansion. The global expansion of the production-related functions heads for Transnational via Global, while that of the marketing-related functions is bound for the same goal via Multidomestic. Therefore, the dynamics of global expansion can be clearly dened as a transitional movement toward Transnational from Domestic via either Global or Multidomestic, according to the nature of each function in the value chain. Figure 1 illustrates the criteria, the typology, the stages, the dynamics of the DDC model (left), and the conceptual illustration of the functional division in the DDC model (right). Each of the two diagrams in Figure 1 focuses on different aspects of the DDC model. The left-hand side diagram depicts the criteria, typology, stages, and dynamics of the global expansion of rms. Diversication and Coordination are employed in both the production function and the marketing function. Dynamics of global expansion is graphically illustrated as a transitional movement across three stages from Domestic toward Transnational, in which the production function takes the Global strategy while the marketing function pass through the Multidomestic strategy. The right-hand side diagram illustrates functional division at the level of functional activities in the value chain. The confusing phenomenon of the global expansion of rms at the level of the rm can be clearly understood at the functional level from the perspective of the functional division: intermingled at the rm level but clearly divided at the functional level into the production and marketing sides. New measurement for global expansion As Transnational is the eventual goal of all the rms pursuing global expansion, the distance between the current position of a rm in the DDC model and the ideal Transnational that is located at the upper right corner of the DDC model can be intuitive and adequate measurement for the degree of the global expansion of a rm. In addition, as explained in the aforementioned discussion, the measurement should be considered in the two sides of production and marketing. Therefore, the DDC model can generate a new index, the DDC index, which measures the degree of global expansion of a rm as a summation of the production distance and the marketing distance: the distance between a rms current position in the production function and the ideal Transnational measures the degree of the global expansion in the production side, and the distance between a rms current position in the marketing function and the ideal Transnational measures the degree of the global expansion in the marketing p side. The DDC index is calculated as a summation of 2 the distance of a rm from p the ideal Transnational in production and 2 the distance of a rm from the ideal Transnational in marketing[1].

142

Hypotheses Three hypotheses are suggested in the area of the division of function in global expansion, the dynamics in global expansion, and the relationship between the degree of global expansion and nancial performance. Functional division Through the literature review and deductive reasoning, we suggest that there is a division of functions according to the nature of each function in the process of global expansion of a rm. Especially, it is argued that the Global strategy is suitable for the production function, while the Multidomestic strategy is appropriate for the marketing function. Based on this inference, the following hypotheses are derived: H1a. There is a division of functions in the process of global expansion. H1b. Firms take the Global strategy for the production function, while they implement the Multidomestic strategy for the marketing function. Dynamics of global expansion As Transnational is the eventual goal of global expansion, rms implementing global expansion strategy head for Transnational. On their way to Transnational, according to the new construct of functional division, functions in the value chain take different paths according to the characteristics of each function. The production functions are expected to take the path of Domestic to Transnational via Global, while the marketing functions are via Multidomestic: H2. A rm takes dynamic paths in the implementation of global expansion strategy from Domestic to Transnational through either Global or Multidomestic in accordance with the nature of each function in the value chain: production via Global, while marketing via Multidomestic. Global expansion and nancial performance Many studies have employed single-item measurement in their study of the relationship between the degree of global expansion of a rm and its nancial performance (Farrell, 2004; Kumar, 1984; Rugman and Verbeke, 2004; Vernon, 1971, inter alia). The single-item measurement approach, however, can result in distorted estimation of global expansion (Sullivan, 1994), and cannot capture the full extent of global expansion of a rm with each of the item in isolation (UNCTAD, 1995, p. 24). In addition, many other studies with the multi-item approach also lack in the academic rationale for their choice of criteria. In this light, considering that the core international business theory argues positive relationship between the degree of global expansion of a rm and its nancial performance (Capar and Kotabe, 2003; Contractor et al., 2003), the DDC index is expected to have positive correlation with nancial performance with higher level of explanatory power, because it is derived from critical analyses on the existing models and consequently organized in a more systemic and intuitive way: the DDC index is equipped with a theoretical rigor because the index, unlike other indices measuring the degree of global expansion of rms, is incorporated into the DDC model, a model explaining the phenomenon in a more comprehensive way than existing models:

A new framework for global expansion 143

MD 46,1

H3. The degree of global expansion of a rm measured by the DDC index is positively correlated with nancial performance of the rm. Data and methodology For the empirical test of the DDC model, we collect data from 15 global automakers in motor industry because motor industry is one of the most globalized industries (UNCTAD, 2003, p. 5), and consequently will show clear and distinctive features of global expansion of rms. The DDC model needs Diversication and Coordination data in both production and marketing sides. For Production Diversication and Marketing Diversication, data are collected from 2002 World Automakers Directory: Global Vehicle Manufacturer Directory, published by Automotive News Data Center. Production Coordination is calculated as the ratio of world production to domestic production. Though intra-rm trade may be a good proxy to measure the Production Coordination of multidomestic companies, the data are unavailable for individual rms (Westney and Zaheer, 2003, p. 355). For the optimization of the new model, it is assumed that the greater the ratio of foreign production to domestic production, the greater the intra-rm ows and thereby the greater the degree of Production Coordination. Data for world production and domestic production are collected from 2003 Motor Industry, published by Hyundai Motor. Marketing Coordination is also calculated as the ratio of world market share to the number of models that a rm provides. This is also based on the assumption that the greater the degree of world market share per model, the greater the degree of Marketing Coordination. Data for world market share and numbers of models are gathered from 2002 Market Data Book: 2001 Global Production by Region, and 2002 Market Data Book: 2001 Global Production and Sales by Manufacturer, published by Automotive News Data Center. For the measurement of nancial performance, nine nancial variables are initially collected from Fortune the Global 500, Forbes the Global 500, and BusinessWeek the Global 1,000, among which we select revenues from Fortune (2002) and net income from Forbes (2002) as major variables according to the statistical signicance. Table IV lists standardized indices comprising the DDC model, the DDC index, and nancial performance of the 15 global automakers. Multivariate analysis of variance (MANOVA) and discriminant analysis are used for H1 to test the functional division in the implementation of global expansion strategy. MANOVA is a multivariate extension of the univariate techniques for assessing the difference between group means, and discriminant analysis is a statistical technique appropriate for identifying the group to which an object belongs (Hair et al., 1998). Two groups of the production function and the marketing function are put into MANOVA to test the functional division, and a discriminant function is derived from discriminant analysis as a boundary line between the groups. In the test of H2 and H3, correlation analysis is employed. Results Functional division The results of MANOVA analysis testing H1 are listed in Table V. The signicant level of the statistical analysis is less than 0.01. This statistically supports that the

144

Firms General Motors Ford Motor Toyota Motor Volkswagen AG Daimler Chrysler AG PSA/Peugeot-Citroen Honda Motor Hyundai Motor Nissan Motor Fiat S.p.A Renault SA Mitsubishi Motors Suzuki Motor BMW Mazda Motor

PDa,h PCb,h MDc,h MCd,h 0.762 1.000 0.619 0.571 0.429 0.238 0.476 0.333 0.143 0.429 0.524 0.190 0.095 0.095 0.000 0.733 0.683 0.331 1.000 0.321 0.359 0.700 0.000 0.610 0.383 0.430 0.409 0.392 0.174 0.129 1.000 0.750 0.750 0.625 0.375 0.250 0.500 0.625 1.000 0.000 0.375 0.375 0.375 0.500 0.250 0.532 0.692 0.106 0.509 0.522 1.000 0.327 0.324 0.078 0.264 0.556 0.000 0.045 0.218 0.034

TPe 1.057 1.097 0.644 0.986 0.527 0.419 0.810 0.212 0.473 0.573 0.672 0.412 0.324 0.189 0.088

TMf 0.946 1.018 0.486 0.797 0.627 0.664 0.576 0.641 0.492 0.173 0.647 0.235 0.273 0.486 0.192

DDC Revenues Net income Iindexg ($ millions) ($ millions) 2.003 2.115 1.130 1.782 1.154 1.083 1.387 0.853 0.965 0.746 1.319 0.647 0.598 0.675 0.279 177,260 162,412 120,731 82,093 136,798 45,000 58,841 17,432 49,521 51,521 32,529 25,598 13,333 34,418 16,743 601 276,543 4,922 90,678 182,415 48,950 2,899 14,763 52,427 88,541 42,709 21,041 9,638 44,447 12,327

A new framework for global expansion 145

Notes: a Production diversication; bProduction coordination; cMarketing diversication; dMarketing p coordination; eTransnationality in production: 2 the distance from the ideal transnational in p f production; Transnationality in Marketing: 2 the distance from the ideal transnational in marketing; gTransnationality in production + transnationality in marketing; hStandardized Index (Xi X min) 4 (X max X min)

Table IV. Data for DDC model and nancial performance

Effect Pillais trtrace Wilks Lambda Hotellings ttrace Roys largest root

Value 0.259 0.741 0.349 0.349

F 4.017 4.017a 4.017a 4.017a

a

Hypothesis df 2.000 2.000 2.000 2.000

Error df 23.000 23.000 23.000 23.000

Sig. 0.032 0.032 0.032 0.032

Notes: Two data are removed as outliers (PSA/Peugeot-Citroen, Fiat S.p.A); aExact statistic

Table V. Results of MANOVA and discriminant analysis

production function and the marketing function have different characteristics from each other in the process of global expansion and, consequently, that there is functional division in the implementation of global expansion strategy. Hence, H1a is supported. The discriminant analysis results in the discriminant function of y 1.004x 0.113, which is a virtual line that divides the two functions of production and marketing into two different groups. This virtual line is located very close to the diagonal line (y x) of the DDC model, supporting the validity of the model that deploys the production functions above the diagonal line and the marketing functions under the line. As expected, most of the production functions are located in the upper-left area of the discriminant function, while the majority of the marketing functions are in the lower-right area of the function. This shows that the Global strategy is appropriate for the production function, while the Multidomestic strategy is adequate for the marketing function, and supports H1b.

MD 46,1

146

Dynamics of global expansion Table VI shows the result of correlation analysis between the distance from the origin (DO) and the distance from the ideal Transnational (DT) in both the production function and the marketing function. If all the rms are located on the diagonal line of the DDC model, the DOs and the DTs of the rms have a correlation coefcient of 2 1. This means that any increase in Diversication would increase exactly the same ratio of Coordination and, consequently, an increase in DO would result in a decrease of DT in the same proportion, showing the dynamics from the origin to the idea Transnational. Any line with a correlation coefcient close to -1 would follow similar pattern and the correlation coefcients of DOP-DTP and DOM-DTM listed in Table VI are close to -1, with high statistical signicance. Together with the fact supported in H1a and H1b that the production functions pursuit the Global strategy with the global expansion path above the diagonal line and the marketing functions implement the Multidomestic strategy through the path under the diagonal line, this results show that global expansion of the production function starts from Domestic and moves toward Transnational through Global, while that of the marketing through Multidomestic. Therefore, H2 is supported. Global expansion and nancial performance Table VII lists the results of correlation analysis between the degree of global expansion of rms in the motor industry and their nancial performance. Transnationality in both the production and the marketing functions is considered together with the DDC index, for the better understanding of the impact of each function on the nancial performance in global expansion. Transnationality in the production and the marketing functions shows a similar level of correlation with nancial performance, implying that both functions have important effects on the nancial performance. The DDC index also shows a high level of positive correlation with nancial performance. In brief, all the indices have positive correlation with nancial performance and all the results are statistically signicant, which supports H3. Implications Research implications There are three stages in the implementation of global expansion strategy of a rm, as depicted in Figure 1. In the language of existing studies, the trade-off between global
DTPa DOPc Pearson Correlationcorrelation Sig. (two-tailed) N Pearson Correlationcorrelation Sig. (two-tailed) N 20.987 * 0.000 13 20.727 * 0.005 13 DTMb 2 0.814 * 0.001 13 2 0.848 * 0.000 13

DOMd Table VI. Results of correlation analysis between DO and DT

Notes: aDistance from the ideal transnational in the production function; bDistance from the ideal transnational in the marketing function; cDistance from the origin in the production function; d Distance from the origin in the marketing function; *p , 0.01, two-tailed test

Indices Transnationality in production: Pearson correlation Sig. N Transnationality in marketing: Pearson correlation Sig. N DDC index: Pearson correlation Sig. N

Revenues 0.765 * * * 0.002 13 0.750 * * * 0.003 13 0.795 * * * 0.001 13

Net income 0.413 * 0.080 13 0.543 * * 0.027 13 0.491 * * 0.044 13

A new framework for global expansion 147

Notes: *p , 0.1; * *p , 0.05; * * *p , 0.01; (Revenues: two-tailed tests, Net income: one-tailed tests)

Table VII. Results of correlation analysis between degree of global expansion and nancial performance

standardization and multidomestic customization in stage 2 can be mutually complemented in stage 3 by taking a strategic leap as a rm enhances its competitiveness through learning and innovation and, consequently, plays a different level of games from other competitors. The previous studies, however, have been silent over the debates on globalization. In the previous studies, the rm level has been treated as an indivisible atom comprising the global expansion of a rm, which results in contrary views over the same phenomenon. By introducing a new concept of functional division, the DDC model provides a comprehensive analytical tool that encompasses ways to utilize the different strategic characteristics of the production and the marketing functions, as well as the dynamics of global expansion from trade-off to mutual complementation. By shifting the level of analysis to the function in the value chain, the DDC model clearly shows where to focus in the stage of trade-off and what to implement to successfully migrate to the stage of mutual complementation. In this light, the debates on the adequacy of stuck-in-the-middle in the previous literature can be understood with much more clarity. In addition, the model suggests useful insight for the sophisticated understanding over the degree of global expansion of each function, with which a rm can establish a series of competitive strategies by balancing or leveraging the functions. Practical implications The DDC model can be easily applied to managerial decisions. Employing the DDC model, mangers can recognize the level and characteristics of their rms global expansion, not only at the rm level but also the functional level. At the rm level, managers can derive strategic implications by comparing the rms overall level of global expansion to their competitors: with whom to compete? When to make a strategic leap and what to prepare for that? At the functional level, managers can make both within-rm and across-rm comparison: they can compare the level and characteristics of global expansion in one function with other functions in the rm, as well as with those of competitors. In this manner, the DDC model allows managers to establish a global strategy tailored to each function, thus reconciling possible conicts

MD 46,1

generated from different interests among different functions in the rm. As each function in the value chain shows different characteristics in the process of global expansion, managers can implement more effective strategy for the global expansion of their rm by integrating into the strategy process the different needs of each function analyzed with the DDC model. Conclusion After critical evaluation of existing studies on the global expansion of a rm, this paper introduces the dynamic diversication-coordination (DDC) model as a new framework explaining the global expansion of a rm, and empirically tests the validity of the new framework with statistical analyses. The empirical analysis supports three hypotheses. First, each function has its own strategy of global expansion: the Global strategy for production, while the Multidomestic strategy for marketing. Second, each function takes a dynamic path in the process of global expansion from Domestic to Transnational via either Global or Multidomestic. Last, there is a positive correlation between the degree of global expansion of a rm and its nancial performance. The contribution of the paper can be summarized as follows. First, this paper introduces a new model on the global expansion of a rm. With critical and comprehensive integration of previous studies and a new construct of functional division by shifting level of analysis, the DDC model reconciles the contrary views on global expansion in the existing literature and suggests implications over the fundamentals and the implementations of global expansion strategy. Second, this study provides the DDC index as an intuitive way for measuring the degree of global expansion of a rm within the framework of the DDC model. The new index measures the degree of global expansion of a rm with simultaneous consideration of both the production and the marketing function in accordance with the structure of the DDC model and, consequently, suggests useful implications in understanding the current status of global expansion of a rm and establishing further competitive strategy. Finally, this paper empirically tests the validity of the constructs in the previous studies on global expansion of a rm. Contrary at the level of rm, the constructs in the previous studies verify their validity with the shift of level of analysis to the level of function. Research in its initial stage tends to focus more on the theoretical aspects rather than empirical analyses. In a same vein, this paper, as a rst attempt to suggest a new model on global expansion from the level of functional activities in the value chain, emphasizes more on the theoretical aspects of the phenomenon and, consequently, is not rich in its empirical data: the sample size of the empirical analyses is small and the data is narrowly focused on the motor industry. As the main focus of this study is to derive a new theoretical framework of global expansion at the functional level and empirical data are employed not to statistically test the rigorousness of the model but rather to help readers understand more tangibly the abstract construct of the framework, the main contribution of this study should be attributed to the theoretical aspects of the new model and the results of the empirical analyses should be interpreted with much caution as preliminary ndings. Further studies adopting time-series analysis would enhance the level of appreciation of the phenomena in global expansion, especially that of the dynamics in the process of implementation of global expansion strategy. Employing a historical perspective, researchers can trace actual paths MNCs have taken in their global expansion and

148

compare the results with the predictions of the DDC model. In addition, an in-depth study over organizational structures or learning mechanism of the MNCs transgressing from stage 2 to stage 3 would suggest what factors enable the MNCs to take strategic leaps from the stage of trade-off to that of mutual complement. An application of the DDC model to other industries would also test the predictions of the DDC model and enrich the understanding of the fundamentals in global expansion of a rm.
Note 1. As data comprising both Diversication and Coordination are standardized, the length of both the ordinate and the abscissa of the DDC model in Figure 1 measure to be 1, respectively, and, consequently, the length of the diagonal line of the DDC model, the p maximum length in the model, is 2. References Bartlett, C.A. and Ghoshal, S. (1989), Managing across Borders: The Transnational Solution, Harvard Business School Press, Boston, MA. Benito, G.R.G. (2003), Seen through the lens of international business strategy, Keynote Lecture at the International Conference on Divestment: Corporate Strategies, the Regions and Policy Responses, Lisbon. Capar, N. and Kotabe, M. (2003), The relationship between international diversication and performance in service rms, Journal of International Business Studies, Vol. 34, pp. 345-55. Collis, D.J. (1991), A resource-based analysis of global competition: the case of the bearings industry, Strategic Management Journal, Vol. 12, pp. 49-68. Contractor, F.J., Kundu, S.K. and Hsu, C.C. (2003), A three-stage theory of international expansion: the link between multinationality and performance in the service sector, Journal of International Business Studies, Vol. 34 No. 1, pp. 5-18. Douglas, S.P. and Wind, Y. (1987), The myth of globalization, Columbia Journal of World Business, Vol. 22 No. 4, pp. 19-29. Dunning, J.H. (1981), International Production and the Multinational Enterprise, George Allen & Unwin, London. Dunning, J.H. (1988), The eclectic paradigm of international production: a restatement and some possible extensions, Journal of International Business Studies, Vol. 19 No. 1, pp. 1-32. Dunning, J.H. (2000), The eclectic paradigm as an envelope for economic and business theories of MNE activity, International Business Review, Vol. 9 No. 2, pp. 163-90. Farrell, D. (2004), Beyond offshoring: assess your companys global potential, Harvard Business Review, Vol. 82 No. 12, pp. 82-90. Fortune (2002), The Global 500, p. 97. Forbes.com (2002), The Global 500, available at: www.forbes.com/global/2002/0722/global. html Grant, R.M. (1998), Contemporary Strategy Analysis: Concepts, Techniques, Applications, 3rd ed., Blackwell Business, Malden, MA. Grosse, R. (2005), Are the largest nancial institutions really global?, Management International Review, Vol. 45 No. 1, pp. 129-44. Hair, J.F., Anderson, R.E., Tatham, R.L. and Black, W. (1998), Multivariate Data Analysis, 5th ed., Prentice-Hall, Englewood Cliffs, NJ.

A new framework for global expansion 149

MD 46,1

150

Hamel, G. and Prahalad, C.K. (1985), Do you really have a global strategy?, Harvard Business Review, Vol. 63 No. 4, pp. 139-48. Harzing, A.W. (2000), An empirical analysis and extension of the Bartlett and Ghoshal typology of multinational companies, Journal of International Business Studies, Vol. 31 No. 1, pp. 101-20. Hitt, M.A. and Ireland, R.D. (1985), Corporate distinctive competence, strategy, industry and performance, Strategic Management Journal, Vol. 6 No. 3, pp. 273-93. Hitt, M.A., Ireland, R.D. and Palia, K.A. (1982), Industrial rms grand strategy and functional importance: moderating effects of technology and uncertainty, Academy of Management Journal, Vol. 25 No. 2, pp. 265-98. Hout, T., Porter, M.E. and Rudden, E. (1982), How global companies win out, Harvard Business Review, Vol. 60 No. 5, pp. 98-108. Hung, K.H., Li, S.Y. and Belk, R.W. (2007), Glocal understandings: female readers perceptions of the new woman in Chinese advertising, Journal of International Business Studies, forthcoming. Johnson, J.H. (1995), An empirical analysis of the integration-responsiveness framework: US construction equipment industry rms in global competition, Journal of International Business Studies, Vol. 26 No. 3, pp. 621-35. Kim, K., Park, J.H. and Prescott, J.E. (2003), The global integration of business functions: a study of multinational businesses in integrated global industries, Journal of International Business Studies, Vol. 34 No. 4, pp. 327-44. Kumar, M.S. (1984), Growth, Acquisition, and Investment: An Analysis of the Growth of Industrial Firms and Their Overseas Activities, Cambridge University Press, Cambridge. Levitt, T. (1983), The globalization of markets, Harvard Business Review, Vol. 61 No. 3, pp. 92-102. Makhija, M.V., Kim, K. and Williamson, S.D. (1997), Measuring globalization of industries using a national industry approach: empirical evidence across ve countries and over time, Journal of International Business Studies, Vol. 28 No. 4, pp. 679-710. Malnight, T.W. (1995), Globalization of an ethnocentric rm: an evolutionary perspective, Strategic Management Journal, Vol. 16 No. 2, pp. 119-42. Martinez, J.I. and Jarillo, J.C. (1989), The evolution of research on coordination mechanisms in multinational corporations, Journal of International Business Studies, No. 3, pp. 489-514. Moon, H.C. (1994), A revised framework of global strategy: extending the coordination conguration framework, The International Executive, Vol. 36 No. 5, pp. 557-74. Porter, M.E. (1980), Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, New York, NY. Porter, M.E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York, NY. Porter, M.E. (1986), Competition in Global Industries, Harvard Business School Press, Boston, MA. Porter, M.E. (1996), What is strategy?, Harvard Business Review, Vol. 74 No. 6, pp. 61-78. Prahalad, C.K. and Doz, Y.L. (1987), The Multinational Mission: Balancing Local Demands and Global Vision, Free Press & Collier Macmillan, New York, NY. Rigby, D.K. and Vishwanath, V. (2006), Localization the revolution in consumer markets, Harvard Business Review, Vol. 84 No. 4, pp. 82-92.

Rommel, G., Bruck, F., Diederichs, R., Kluge, J. and Kempis, R. (1995), Simplicity Wins: How Germanys Mid-sized Industrial Companies Succeed, Harvard Business School Press, Boston, MA. Roth, K. (1992), International conguration and coordination archetypes for medium-sized rms in global industries, Journal of International Business Studies, Vol. 23 No. 3, pp. 533-49. Roth, K. and Morrison, A.J. (1990), An empirical analysis of the integration-responsiveness framework in global industries, Journal of International Business Studies, Vol. 21 No. 4, pp. 541-64. Roth, K., Schweiger, D.M. and Morrison, A.J. (1991), Global strategy implementation at the business unit level: operational capabilities and administrative mechanisms, Journal of International Business Studies, Vol. 22 No. 3, pp. 369-402. Rugman, A. and Hodgetts, R. (2001), The end of global strategy, European Management Journal, Vol. 19 No. 4, pp. 333-43. Rugman, A.M. and Verbeke, A. (2004), A perspective on regional and global strategies of multinational enterprises, Journal of International Business Studies, Vol. 35 No. 1, pp. 3-18. Rugman, A.M. and Verbeke, A. (2006), Strategies for multinational enterprises, in Faulkner, D. and Campbell, A. (Eds), The Oxford Handbook of Strategy, Oxford University Press, Oxford, pp. 675-97. Sullivan, D. (1994), Measuring the degree of internationalization of a rm, Journal of International Business Studies, Vol. 25 No. 2, pp. 325-43. Svensson, G. (2001), Glocalization of business activities: a glocal strategy approach, Management Decision, Vol. 39 No. 1, pp. 6-18. Svensson, G. (2002), Beyond global marketing and the globalization of marketing activities, Management Decision, Vol. 40 Nos 5/6, pp. 574-83. Taggart, J.H. (1997), Autonomy and procedural justice: a framework for evaluating subsidiary strategy, Journal of International Business Studies, Vol. 28 No. 1, pp. 51-76. Tallman, S.B. and Yip, G.S. (2003), Strategy and the multinational enterprise, in Rugman, A.M. and Brewer, T.L. (Eds), The Oxford Handbook of International Business, Oxford University Press, Oxford, pp. 317-48. UNCTAD (1995), World Investment Report 1995: Transnational Corporations and Competitiveness, United Nations, New York and Geneva. UNCTAD (2003), UNCTAD World Investment Report 2003: FDI Policies for Development: National and International Perspectives, Untied Nations, New York and Geneva. Vernon, R. (1971), Sovereignty at Bay: The Multinational Spread of US Enterprises, Basic Books, New York, NY. Westney, D.E. and Zaheer, S. (2003), The multinational enterprise as an organization, in Rugman, A.M. and Brewer, T.L. (Eds), The Oxford Handbook of International Business, Oxford University Press, Oxford, pp. 349-79. Yip, G.S. (1992), Total Global Strategy: Managing for Worldwide Competitive Advantage, Prentice-Hall, Englewood Cliffs, NJ. Corresponding author Min-Young Kim can be contacted at: mkim229@uiuc.edu

A new framework for global expansion 151

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints