J. of the Acad. Mark. Sci.
(2012) 40:218–235
DOI 10.1007/s11747-011-0270-5
The regional and global competitiveness
of multinational firms
Alan M. Rugman & Chang Hoon Oh & Dominic S. K. Lim
Received: 24 February 2011 / Accepted: 15 June 2011 / Published online: 10 July 2011
# Academy of Marketing Science 2011
Abstract International competitiveness ultimately depends
upon the linkages between a firm’s unique, idiosyncratic
capabilities (firm-specific advantages, FSAs) and its home
country assets (country-specific advantages, CSAs). In this
paper, we present a modified FSA/CSA matrix building
upon the FSA/CSA matrix (Rugman 1981). We relate this
to the diamond framework for national competitiveness
(Porter 1990), and the double diamond model (Rugman and
D’Cruz 1993). We provide empirical evidence to demon-
strate the merits and usefulness of the modified
FSA/CSA matrix using the Fortune Global 500 firms.
We examine the FSAs based on the geographic scope of
sales and CSAs that can lead to national, home region,
and global competitiveness. Our empirical analysis
suggests that the world’s largest 500 firms have increased
their firm-level international competitiveness. However,
much of this is still being achieved within their home
region. In other words, international competitiveness is a
regional not a global phenomenon. Our findings have
significant implications for research and practice. Future
A. M. Rugman (*)
School of Management, Henley Business School,
University of Reading,
Henley-on-Thames, Oxon RG9 3AU, UK
e-mail: a.rugman@henley.reading.ac.uk
C. H. Oh : D. S. K. Lim
Brock University,
500 Glenridge Avenue,
St. Catharines, ON L2S 3A1, Canada
C. H. Oh
e-mail: coh@brocku.ca
D. S. K. Lim
e-mail: dlim@brocku.ca
research in international marketing should take into
account the multi-faceted nature of FSAs and CSAs
across different levels. For MNE managers, our study
provides useful insights for strategic marketing planning
and implementation.
Keywords International competitiveness . Regional .
Global . Diamond . Double diamond . International
marketing strategy . Firm-specific advantages (FSAs) .
Country-specific advantages (CSAs)
Introduction
The collaboration between scholarly disciplines (e.g., psy-
chology and marketing; marketing and international business)
has been the driver of some major advancements in academic
fields. International competitiveness is a subject that draws
upon perspectives from international business, strategy,
international economics, as well as international marketing.
In this paper, we provide a broad yet refined perspective of
international competitiveness by building on the international
business and strategy literature. In doing so, our purpose is to
facilitate further collaboration between academic disciplines,
which is essential if we are to examine finer-grained research
questions concerning the concept of international competi-
tiveness. Specifically, we adopt a multiple perspectives
approach to present a new conceptualization of international
competitiveness. We further demonstrate the merit of our
approach by analyzing and testing the nature and extent of
international competitiveness of the world’s 500 largest firms.
These firms account for over half the world’s trade (on an
intra-firm basis as well as with arm’s length customers) and
over 90% of the world’s foreign direct investment (FDI)
(Rugman 2005).
J. of the Acad. Mark. Sci. (2012) 40:218–235
International competition has brought dramatically in-
creased pressure to cut costs in order to compete with
foreign companies, to satisfy to domestic and foreign
customer needs, and to improve business processes.
However the role of marketing in enhancing competitive-
ness has been neglected in the literature (Doyle and Wong
1998). In addition, most of the literature measuring
international competitiveness focuses on firms from a
country or region (e.g., Buckley et al. 1990; Coviello et
al. 1998; Doyle and Wong 1998; Özçelik and Taymaz 2004;
Traill and da Silva 1996) and thus ignores country (region)
specific factors. As an initial step toward addressing this
gap, we focus on the location specificity of international
competitiveness by comparing firms from different
countries and regions. That is, we investigate the extent to
which the domestic, home region, and global activities of
the largest 500 firms are determined by international
competitiveness, which, in turn, comprises national, re-
gional, and global competitiveness.
A critical insight from this approach is that international
competitiveness occurs at the intersection between country-
level and firm-level advantages. In short, international
competitiveness relates country-specific advantages (CSAs)
to firm-specific advantages (FSAs). In turn, these linkages
between CSAs and FSAs can be analyzed both theoretically
and empirically. Here we develop a framework relating
CSAs to FSAs building upon Rugman’s (1981) FSA/CSA
matrix and examine the linkages between CSAs in the
home country, home region, and the globe (foreign regions)
and the potentially related FSAs of those home country
firms; the framework is based on the concept of interna-
tional competitiveness and the new perspective of regional
multinational enterprise (MNE) (Rugman and Verbeke
2004). This analysis of international competitiveness also
embeds the findings of the nature and extent of FSAs and
CSAs within the classic diamond framework of Porter
(1990) as extended by Rugman and D’Cruz (1993) into the
double diamond.
We believe that our integrative consideration of firm-
specific and country-specific determinants can add
significantly to international marketing research on
international competitiveness. As MNEs play increasing-
ly important roles in the integrated world economy, a
sophisticated perspective about how these MNEs lever-
age their FSAs, derived from CSAs—both their home
countries and host countries—should be useful as we
seek to better understand their international marketing
strategies and implementation.
This paper proceeds as follows. We first illuminate the
regional reality by examining the nexus between country-
level and firm-level factors. Next, we expand our perspec-
tive beyond the country level to incorporate regional and
global levels of analysis. We then describe our data and
219
method and present our empirical findings on the interna-
tional competitiveness of the world’s 500 largest firms.
Finally, we discuss the implications of this empirical
evidence for international marketing researchers as well as
managers.
Theories and literature
A firm’s international activity is a complex phenomenon,
influenced by a myriad of country- and firm-specific
factors. For example, Vernon’s (1966) work on the product
cycle (e.g., new product, maturing product, and standard-
ized product stages) links the success of U.S. MNEs to
strong U.S. CSAs in technology. He shows that U.S. MNEs
expand U.S. national competitiveness through international
trade and foreign direct investment. These MNEs have
marketable products based on technology, knowledge, and
resources. Their success is determined by the ease of
communication, which is a function of geographical
proximity, even if we assume that MNEs in different
countries can have access to identical knowledge and
resources. In a similar vein, from an international
marketing perspective, Wells (1968) notes that the export
success of U.S. MNEs was determined by a great deal of
knowledge based on a very high-income, consumer-based
CSA in the U.S.
In addition, MNEs differ in their level of capabilities to
access and utilize CSAs in knowledge and resources, and
thus firm-specific characteristics, FSAs, also determine
marketability. Marketing capability does not work in
isolation from the firm’s other capabilities and processes
(Doyle and Wong 1998). In fact, internalization theory
(Rugman 1981) considers FSAs and CSAs as the two
building blocks to analyze international competitiveness.
The next wave of international business research focused
on the FSAs of international activity. For example, literature
identified such FSAs as: firm size (Levitt 1983), managerial
capability (Bartlett and Ghoshal 1989; Kogut 1985; Porter
1986), R&D and marketing capabilities (Buckley and
Casson 2010; Porter 1986), and financial capability
(Agarwal and Ramaswami 1992; Grosse 1992). Recently
Johanson and Vehlne (2010) have underlined business
relationships and networks within a company and between
companies. Thus these FSAs lead to superior performance
by MNEs in international markets (Kirca et al. 2011).
However, focusing only on firm-specific determinants can
be misleading if we do not take into account the context
within which these firm-level factors are embedded. As
such, there has been a renewed need to look at country-
specific determinants and how these two determinants
affect the competitiveness of firms in international business
(Dunning 1998).
220
International competitiveness and international marketing
The need for consideration of CSAs in both home and
host countries has been emphasized in the literature on
the strategy and performance of MNEs and their
subsidiaries (Dunning 1998; Grewal et al. 2009; Rugman
1981; Rugman and Verbeke 2001). In marketing, early
stage research tended to focus on a simple dichotomous
view of foreign versus domestic products, or, in a similar
vein, “nationality” itself as a factor (e.g., Kotabe 1990).
The marketing literature also highlighted the role of
national culture, more specifically, cultural distance or
similarity between the host country and home country (i.e.,
country of origin effects). The main finding is that consumers
prefer products from the countries with a relatively similar
culture (e.g., Johansson et al. 1985; Heslop et al. 1998; Wang
and Lamb 1983).
However, the increasingly important role of MNEs in
the world economy calls for a more sophisticated
perspective about how these MNEs leverage competitive
advantages conferred or affected by country-specific
factors. These home country factors include competitive-
ness and regulatory frameworks that may affect home
country–level operations (e.g., Carpano et al. 1994;
Grewal et al. 2009; Porter 1986). For example, a country’s
economic competitiveness may determine the sophistica-
tion with which a country’s firms develop FSAs in
marketing, production technology, physical capital, and
managerial skills (Balabanis and Diamantopoulos 2004).
This view on the relevance of home CSAs is consistent
with Porter’s perspective as he argues that a firm’s
competitive performance within world markets is influ-
enced by a variety of home country factors (Porter 1990).
The home country national environment (represented by
the Porter home country diamond) has significant influence
on a firm’s competitive advantage and therefore its strategy
formulation. Grant (1991) further argues that factor con-
ditions and the related and supporting industries may
influence a firm’s resource strengths, while rivalry and
home demand conditions mainly influence key success
factors within the market. Scholars in international business
have explored other dimensions of international competi-
tiveness such as government conditions and macro-
economic policy that Porter originally considered as
exogenous factors (Cho and Moon 2000; Moon et al.
1998; Rugman and Verbeke 1990).
Despite the intuitive appeal of this perspective on the
role of the firm as an agent for international competi-
tiveness, the extant marketing literature has not found
strong and consistent support for the influence of
national competitiveness on firm performance and mar-
keting strategy. For example, Balabanis and Diamantopoulos
(2004) could not confirm the hypothesized relationship
J. of the Acad. Mark. Sci. (2012) 40:218–235
between economic competitiveness and consumer ethno-
centrism, and they conclude that this viewpoint does not
provide significant value to managers. Tellis et al.
(2009) investigation of radical innovation in 17 major
economies in the world also suggests that widely
recognized country-level metrics of labor, capital, gov-
ernment regulation, and culture do not have a direct
impact on radical innovation.
This lack of empirical support for the application of
the Porter home country diamond to international
marketing could be due to the methodology and framing
adopted in some of these works. For example, some
researchers focus only on host country market character-
istics in terms of demand potential and similarity of legal
and regulatory frameworks (e.g., Cavusgil et al. 1993;
Cavusgil and Zou 1994), while some others focus on
home country characteristics (e.g., Tellis et al. 2009). In
addition, the literature suggests that Porter’s diamond
framework can apply to large economies but not to small
non-triad nations such as Austria, Australia, Canada,
Finland, the Netherlands, and New Zealand (Davis and
Ellis 2000; Rugman and D’Cruz 1993). As previously
discussed, this has led to the logic of the double diamond
framework, whereby a small economy’s diamond is
examined along with the diamond of its largest trading
partner (Rugman and D’Cruz 1991, 1993). Another source
of the inconsistent findings in marketing about interna-
tional competitiveness could be the simplistic metrics that
some of these studies use to test national competitiveness
or its distance between home country and host country. For
example, Balabanis and Diamantopoulos (2004) use the
national competitiveness rankings based on WEF Current
Competitiveness Index (CCI), and Johnson and Tellis
(2008) measure economic distance between two countries
based on per capita GNP.
To overcome these potential shortfalls, research should
take into account not only home country factors but also
host country factors and, in doing so, take into consider-
ation the multi-faceted nature of a country’s economic
environment, both conceptually and empirically. To this
end, we propose in what follows a modified FSA/CSA
matrix building upon the double diamond model (Rugman
and D’Cruz 1991, 1993).
The FSA/CSA matrix—an extension to international
competitiveness
The relevant literature explaining the international compet-
itiveness of firms builds upon the FSA/CSA matrix first
developed by Rugman (1981). This basic matrix is widely
used in the international business literature. It comprises
two building blocks, which can be particularly useful in
analyzing international competitiveness of large MNEs.
J. of the Acad. Mark. Sci. (2012) 40:218–235
First, firm-specific advantages refer to a set of firm-level
factors that confer competitive advantage. The FSAs can be
viewed as a firm’s unique, proprietary capabilities, which
may be built upon product or process technology, market-
ing, or distribution skills. Ultimately, the FSAs are based on
the firm’s internalization of an asset, such as production
knowledge and managerial or marketing capabilities over
which the firm has proprietary control. There are also
various factors unique to each country, which are called
country-specific advantages. These CSAs include natural
resource endowments (minerals, energy, forests, etc.), the
quality and quantity of labor force, and associated cultural
factors.
Managers of MNEs take into account both CSAs and
FSAs as they develop strategies to position their firms in
a unique international strategic space. On the one hand,
the managers need to consider the quantity, quality, and
cost of the major factor endowment of a nation, that is,
CSAs. On the other hand, they must develop and
coordinate FSAs in production, marketing, or the
customization of services. As such, a clear understanding
of the relative strengths and weaknesses of the firm’s
CSAs and FSAs is critical as the managers formulate the
strategic options of the MNE. Rugman’s (1981) FSA/
CSA matrix (shown in Fig. 1) provides a useful frame-
work for evaluation of these issues.
In Fig. 1 on the vertical axis we place CSAs either low
or high. On the horizontal axis we place FSAs either low or
high. This leads to four quadrants for analysis. First,
quadrant 1 represents a situation in which only CSAs are
important. This quadrant can be explained through the
literature on international economics and international
finance. Comparative advantage explains movements of
goods and factors across nations. Financial capital depends
Firm-Specific Advantages
Country-
Specific Weak Strong
Advantages
1 3
Strong
2 4
Weak
Weak Strong
Fig. 1 The CSA and FSA matrix. This is developed from the analysis
of Chapter 8 in Rugman (1981)
221
upon interest rate differentials between countries. The
competitiveness of the MNEs in this quadrant depends
upon natural endowments of minerals, oil wells, forest
products, hydro-electric power, and other natural resources
in their home country as well as cheap labor or cheap
skilled labor.
In contrast, quadrant 4 is a pure management
explanation for the success of MNEs. Here, only FSAs
matter: the FSAs stand alone and are not influenced by
CSAs. This is a quadrant reflecting the resource based
view. The firms have strong FSAs that are unique and
proprietary, which in turn are protected by isolating
mechanisms (entry barriers) which prevent rival firms
from acquiring the similar FSAs. These isolating mech-
anisms are often due to aspects of the organizational
structure and the nature of the top management team, a
type of Penrosean effect. Thus, it is necessary to examine
the internal network of the firms when the resource based
view is applied to MNEs. There will be codification of
internal knowledge FSAs and routines for its use within
the internal network of the firm.
Quadrant 3 is a special quadrant only applicable for
international business. In quadrant 3 both FSAs and CSAs
matter. The FSAs of the firm are enhanced and facilitated
through home country CSAs. In general, there may be
internal managerial tensions in reconciling CSAs and FSAs.
The better managed MNEs successfully combine FSAs and
CSAs (Rugman 1996). On the other hand, in quadrant 2,
neither CSAs nor FSAs are important. Firms in this
quadrant need to move to either quadrant 1 (building upon
CSAs) or to quadrant 4 (by improving FSAs). Otherwise
firms in quadrant 2 are not sustainable.
The FSA/CSA matrix can be related to Porter’s (1990)
diamond framework for national competitiveness.
According to Porter (1990), there are four factors that
determine a nation’s competitiveness in the international
arena—factor costs, aggregate demand, related and sup-
porting industries, and the amount of rivalry—also known
as the four corners of the diamond. Each of these
determinants of competitiveness is exogenously influ-
enced by government policy and the role of chance and, in
turn, constitutes a component of an interactive system that
affects firms in the home economy. Porter assumes that the
home country firm exports its products and services, and
he measures international competitiveness in terms of
industries having world export shares greater than the
home country average of their world export share. It
should be noted that Porter examines only exports, so his
diamond does not, strictly speaking, extend to FDI and the
activities of MNEs in having foreign subsidiaries. This
deficiency has been corrected by international business
scholars such as Dunning (1993, 1997) and Rugman and
D’Cruz (1993).
222 J. of the Acad. Mark. Sci. (2012) 40:218–235

Using Porter’s terminology, the strong CSAs in
quadrant 1 of Fig. 1 form the basis of the global platform
that are the ingredients for firms to build FSAs and export—
the essence of international competitiveness. Using the
home country diamond as a staging ground, the exports
of firms represent the home-base “diamond” advantage in
international competitiveness (Porter 1990). The home
country CSAs are also influenced by various tariff and
non-tariff barriers to trade as well as government regu-
lations. In reality, MNEs must also make strategic
decisions to attain efficient global configuration and the
coordination of value chain activities (operations, market-
ing, R&D, and logistics), building upon these home
country CSAs. The managerial capabilities to make such
decisions, in turn, represent a strong FSA. As such,
Porter’s (1990) diamond framework can be extended to
refine the analysis of CSAs and their interaction with
FSAs in the FSA/CSA matrix.
A key limitation of Porter’s (1990) diamond model is its
sole focus on home country conditions: the applicability of
a single diamond model for the study of international trade
is questionable (Davis and Ellis 2000). The double diamond
framework developed by Rugman and D’Cruz (1993)
addresses such concerns. Initially developed in a U.S.-
Canada context, the double diamond framework relates the
four home country conditions to an equivalent set of four
conditions in the major host country trading partner of
Canada, as shown in Fig. 2.
Rugman and D’Cruz (1993) suggest that the interna-
tional competitiveness of Canadian firms depends not only
on their home country diamond conditions but also on
those of their major trading partner, the United States.
While some Canadian firms derive FSAs from CSAs in
natural resources, many others rely on the development of
market-based FSAs and successful brands as they achieve
success in U.S. market. In short, the sources of a firm’s
competitive advantage are not limited to the home country
advantage determined by Porter’s single diamond model.
These can also be achieved by sensing and developing host
country CSAs. As such, the double diamond framework
provides a foundation to investigate the international
competitiveness of MNEs from small open economies
such as Korea, New Zealand, Austria, and Singapore and
many other non-triad countries, as their firms interact
with traditional triad countries such as the United States
and Japan.
In summary, we believe that Porter’s (1990) diamond
framework and Rugman and D’Cruz’s (1993) double
diamond framework provide a useful perspective to extend
the original FSA/CSA matrix (Rugman 1981). This
approach considers both the home country and the leading
host country partner’s diamond for international business
strategy. Further, as recent findings show that MNEs
operate more regionally than globally (Rugman 2005;
Rugman and Verbeke 2004) we need to add this empirical
dimension to a study of international competitiveness.

Host country Supporting industries

Diamond (Supply chains)

Factor condition Demand condition

(Resources) (Customers)

Business outside Government condition

Home region Business
in Home region
Business outside
Home region Government condition

Factor condition Demand condition

(Resources) (Customers)

Home country Supporting industries

Diamond (Supply chains)

Fig. 2 Double diamond framework in international competitiveness. This is developed from the analysis in Rugman and D’Cruz (1993)
J. of the Acad. Mark. Sci. (2012) 40:218–235
Therefore we analyze how the home country diamond and
the home “triad region” diamond together determine the
internationalization of MNEs and lead to a new multidi-
mensional measure of international competitiveness. In
what follows, we provide empirical evidence to demon-
strate the merits and usefulness of the modified FSA/CSA
matrix using the Fortune Global 500 firms.
Data and method
Firm geographic sales and assets
To examine the recent trends in the geographic scope of
firm competitiveness, geographic sales and assets data
are hand-collected from the annual reports of each firm
and supplemented by the Compustat Segment of Stan-
dard and Poor’s and the OSIRIS of Bureau van Dijk. We
use the set of large 500 companies listed in the Fortune
Global 500 in 1999 and 2008 (published in 2000 and 2009
respectively). Most of these very large firms are MNEs
(Rugman 2005). For 1999, 192 North American firms, 164
European firms, 139 Asia Pacific firms, and five non-triad
firms are listed, and for 2008 160 North American firms,
186 European firms, 145 Asia Pacific firms, and nine non-
triad firms are listed. The United States has about 30% of
these large 500 companies and Japan has about 15%, yet
the importance of these two countries relative to the E.U.
is decreasing due to the rise of MNEs from emerging
economies.
From the information regarding geographic sales and
assets, we calculate foreign (F) to total (T) (F/T) sales
and foreign to total assets as measures of the geographic
scope of firm competitiveness (FSAs). For the regional
nature of firm competitiveness we calculate home region
(R) sales to total (intra-regional; R/T) sales and home
region assets to total assets. Following Rugman and
Verbeke (2004) and Rugman (2005), the home region is
defined as a broad triad region (i.e., North America,
Europe, and Asia Pacific). These measures can capture the
geographic reach of downstream (sales; marketing side)
and upstream (assets; production side) FSAs (Rugman et
al. 2009). We use the geographic scope of sales and assets,
which is an outcome measure of FSA, instead of
corporate-level resources (i.e., input measures) such as
firm sales, marketing and R&D intensities, and managerial
capability because these resources and capabilities cannot
be separated into domestic and foreign nor into home
region and foreign region. In addition, these resources are
almost exclusively developed at headquarters, and only a
few foreign subsidiaries develop new resources (Doz et al.
2002; Hennart 2007).
223
Country competitiveness and CSAs
We derive international competitiveness scores based on
the Porter diamond factors from the World Economic
Forum’s Global Competitiveness Reports (WEF GCR)
published in 1999 and 2008 (World Economic Forum
1999, 2008). The WEF publishes the reports based on the
responses from their own annual survey of executives as
well as the data compiled from various secondary sources
such as World Bank’s World Development Indicators. The
GCR for 1999 includes 59 countries, accounting for 88%
of the gross world product in 1998, and the GCR for 2008
includes 134 countries, accounting for approximately 97%
of the gross world product in 2007. The WEF GCR data
have been widely used in international business and
marketing research (e.g., Balabanis and Diamantopoulos
2004; Delmas and Toffel 2008; Goerzen and Beamish
2003; Solleiro and Castanon 2005).
The national competitiveness scores are derived
through a two-stage principal component analysis. The
principal component analysis is known to provide robust
factor scores and is a commonly used dimension
reduction method (Velicer and Jackson 1990). In the first
stage, we categorize the first-order variables commonly
available in the 1999 and 2008 GCRs into four micro-
economic business environment factors based on the
Porter’s “diamond” model (Porter 1990; Porter et al.
2008; Grant 1991). They are: factor (input) conditions;
demand conditions; related and supporting industries; and
firm strategy and rivalry. In addition, we also include two
exogenous macroeconomic factors suggested by Porter
(1990), and Rugman and D’Cruz (1993), that is, macro-
economic policies and social infrastructure and political
institutions. These factors correspond to the “government
condition” in the double diamond framework (Rugman
and D’Cruz 1993: see Fig. 2). After we standardized
variables, we conduct a series of principal component
analysis on each of these variable groups and extract
factors with the Eigenvalue over 1 for each group (Zwick
and Velicer 1986). After dropping some variables with
extremely low loading or cross-loading, single factors with
the Eigenvalue over 1 were extracted for each variable
group. Appendix 1 shows the list of first-order variables
included and their loadings, along with the extract factors
and the reliability scores.
In the second stage, we extract an overarching factor
(that is, the national competitiveness score) and its factor
score from the second-order factors that were extracted in
the first stage. At this stage, the second-order factors
converge on one overarching factor with an eigenvalue
over 1. While the loading factor of macroeconomic
policy is relatively low (0.69), we include all these
224
factors in the calculation based on the reasonable
assumption that national competitiveness is a multidi-
mensional construct. In such a composite latent variable
model specification, the (formative) indicators all have an
impact on a single construct (i.e., international compet-
itiveness) and should not be excluded based on low
loading factors (Jarvis et al. 2003). We note, however, the
high reliability score (Cronbach’s alpha=0.925). These
second-order factors and their loadings in the focal factor
(national competitiveness) are shown in Appendix 2.
Appendix 2 also reports the national competitiveness
scores of key countries that have MNEs on the list of
Fortune Global 500 in 2008. The ranking of national
competitiveness based on Appendix 2 is largely consistent
with that reported in the WEF GCR 2008 calculated using
a different methodology (Sala-i-Martin et al. 2008), thus
demonstrating the face validity of our national competi-
tiveness scores.
Our findings from the two-stage principal component
analysis indicate that a major CSA is factor conditions
for Canada, the United States, the United Kingdom,
South Korea, and Malaysia; demand condition for
Ireland, China, Taiwan and Thailand; supporting indus-
tries for many European countries (such as Austria,
Belgium, France, Germany, Italy, Spain, and Switzer-
land), Turkey, India, and Japan; macroeconomic policy
for Mexico and Russia; social infrastructure and political
institution for Luxembourg, the Netherlands, Portugal,
Australia and Northern European countries such as
Denmark, Finland, and Norway. Thus the key driver of
national competitiveness varies by country. Thus only
looking at a sub-component of CSAs will lead to biased
results regarding a country’s relative competitiveness
compared to other countries. Overall, considering multi-
faceted dimensions of national competitiveness, Den-
mark, Germany, Sweden, and Switzerland have very
strong national competitiveness whereas Russia, Mexico,
Hungary, and Poland have very low national competi-
tiveness among key countries in 2008.
Using the national competitiveness values obtained from
the above we calculate home region competitiveness and
global competitiveness by key countries. Home region
competitiveness and global competitiveness represent the
possible source of location specific advantages that MNEs
can exploit in the rest of their home region or in a foreign
region, respectively. The home region competitiveness is
measured by the GDP weighted average of home region
countries, except for the home country. Global competi-
tiveness is measured by the GDP weighted average of all
countries except for the home region countries. Therefore
global competitiveness varies only by region. Countries in
the same home region share the same global competitive-
J. of the Acad. Mark. Sci. (2012) 40:218–235
ness. We present our results and discuss key findings in the
next section.
Results
Table 1 shows geographic sales of large firms by country.
To improve internal validity, we limit our discussion to
countries that have more than five firms on the list of
Global 500 firms. Regarding F/T sales, there are large
variations by country. In general, European firms are
more internationalized than Asia Pacific firms. German,
Dutch, Swedish and Swiss firms have more than 60% of
their sales in foreign countries, while Australian, Chinese,
and Indian firms have less than 30% of their sales in
foreign countries, on average. However the variations by
country are smaller when we look at intra-regional sales
(i.e., R/T). Most firms have more than 70% of sales in
their home region. Swiss and U.K. firms are somewhat
different from others and have less than 60% of sales in
the home region.
When we examine the changes over ten years, North
American and Asia Pacific firms increase their foreign
sales, while European firms reduce their foreign sales. Yet
European firms are more internationalized than others.
North American firms reduce their home region sales by
7%, while European and Asia Pacific firms increase their
home region sales by 7% and 2% respectively. The
economic downturn and lowered national and home region
competitiveness in North America lead these firms to focus
more on a foreign region, while the enlargement of the
European Union and the rise of the Chinese and Indian
economy make European and Asia Pacific firms focus on
their home region. However these changes are very minor
(less than 1% per year) and stable over time. On average,
large firms have more than 70% of their sales in their home
region. This finding is consistent with Rugman and Verbeke
(2004).
In Table 2, we report F/T assets and intra-regional assets.
The findings for assets are largely consistent with those for
sales, but assets (upstream activities) are somewhat less
internationalized than sales (downstream activity). This
means that downstream capability likely drives firm
internationalization.
Table 3 shows national, home region, and global
competitiveness by country for 1999 and 2008. In general,
developed countries have high national competitiveness,
while developing countries have low national competitive-
ness. Thus developing country MNEs may tap into
developed country competitiveness in their triad region.
For example, Mexican MNEs can access U.S. competitive-
ness, Central and Eastern European MNEs can access
J. of the Acad. Mark. Sci. (2012) 40:218–235 225

Table 1 Geographic sales of large firms by country

N. of firms Foreign to total sales (F/T; %) Intra-regional sales (R/T; %)

1999 2008 1999 2008 1999 2008

North America 192 160 24.0 32.6 80.9 73.0

Canada 12 14 41.5 45.3 86.9 80.0
Mexico 2 4 7.0 60.9 n/a 64.0
United States 178 142 23.0 30.3 80.6 71.9

Europe 164 186 57.4 45.5 67.1 73.6

Austria – 2 – 66.0 – 95.0
Belgium 3 5 n/a 81.1 n/a 42.6
Denmark – 2 – 59.6 – 70.4
Finland 2 2 93.1 78.2 82.6 62.5
France 37 40 69.2 56.0 67.0 68.6
Germany 37 39 49.6 66.4 73.5 64.2
Hungary – 1 – 62.6 – 99.2
Ireland – 1 – 94.7 – 53.6
Italy 10 10 46.9 48.9 89.4 86.2
Luxembourg 1 1 n/a n/a n/a 53.9
Netherlands 9 10 75.5 67.8 56.6 66.9
Norway 2 1 42.4 24.4 72.1 85.0
Poland – 1 – 55.7 – 100.0
Portugal – 2 – 36.0 – 86.7
Russia 2 8 60.2 30.9 100.0 88.9
Spain 5 12 47.4 43.1 57.2 70.8
Sweden 4 6 93.5 80.0 53.0 76.9
Switzerland 11 13 73.3 70.9 59.9 54.3
Turkey – 1 – n/a – n/a
United Kingdom 41 29 45.3 49.4 64.5 59.5

Asia Pacific 139 145 26.9 30.8 77.4 79.7

Australia 7 9 18.9 26.8 67.2 89.6
China 10 37 n/a 22.2 n/a 88.1
India 1 7 < 10.0 28.9 > 90.0 74.7
Japan 107 68 25.1 30.1 78.5 76.9
Malaysia 1 1 n/a 79.2 n/a n/a
Singapore – 2 – n/a – 64.0
South Korea 12 14 51.3 48.5 73.6 75.6
Taiwan 1 6 n/a 39.3 n/a 89.0
Thailand – 1 – n/a – n/a
Total 495 491 33.1 40.8 76.4 74.6

Authors’ calculations based on annual reports. Non-triad firms are excluded (i.e., five firms in 1999 and nine firms in 2008)

Western European competitiveness, and South East Asian
MNEs can access Japan and South Korean competitiveness
through different modes of entry such as trade, FDI, licensing,
and joint venture. On the other hand, developed country
MNEs may limit their activities in developing countries to
operationalize a specific competitiveness such as natural
resources, low wage labor, and market size and potential.
Regarding changes in the past ten years, Table 3 shows
that national competitiveness of European countries did not
change much. The national competitiveness of North
American countries has deteriorated in relative terms, while
Asia Pacific countries have improved national competitive-
ness. Yet the national competitiveness of European and
North American countries is stronger than that of Asia
226 J. of the Acad. Mark. Sci. (2012) 40:218–235

Table 2 Geographic assets of large firms by country

N. of firms Foreign to total assets (F/T; %) Intra-regional assets (R/T; %)

1999 2008 1999 2008 1999 2008

North America 192 160 23.2 30.5 80.6 75.5

Canada 12 14 43.5 45.3 87.1 80.7
Mexico 2 4 n.a 60.7 n.a 70.5
United States 178 142 22.1 27.7 80.3 74.9

Europe 164 186 49.0 50.6 70.9 71.0

Austria – 2 – 69.9 – 88.5
Belgium 3 5 n.a 61.2 n.a 56.9
Denmark – 2 – 59.6 – 84.8
Finland 2 2 65.1 53.9 87.3 95.3
France 37 40 56.8 54.6 67.7 69.9
Germany 37 39 46.8 45.6 75.3 78.9
Hungary – 1 – n.a – n.a
Ireland – 1 – 94.5 – 52.2
Italy 10 10 51.6 44.3 85.9 83.1
Luxembourg 1 1 n.a n.a n.a 59.6
Netherlands 9 10 76.8 63.9 68.7 72.7
Norway 2 1 28.4 46.0 92.4 59.3
Poland – 1 – 44.4 – 99.2
Portugal – 2 – n.a – n.a
Russia 2 8 8.8 14.1 100.0 94.8
Spain 5 12 n.a 45.5 n.a 74.5
Sweden 4 6 93.9 61.6 n.a 80.0
Switzerland 11 13 81.7 91.7 58.3 49.3
Turkey – 1 – n.a – n.a
United Kingdom 41 29 36.5 47.6 68.1 59.4

Asia Pacific 139 145 19.7 24.7 83.1 82.7

Australia 7 9 18.2 22.2 87.8 87.8
China 10 37 n.a 21.9 n.a 88.1
India 1 7 <10.0 22.4 >90.0 >90.0
Japan 107 68 19.2 26.5 82.7 79.9
South Korea 12 14 30.5 20.9 80.4 85.6
Malaysia 1 1 n.a n.a n.a n.a
Singapore – 2 – – 74.5
Taiwan 1 6 n.a 30.7 n.a 73.8
Thailand – 1 – n.a – n.a
Total 495 491 28.4 36.0 78.7 75.5

Authors’ calculations based on annual reports. Non-triad firms are excluded (i.e., five firms in 1999 and nine firms in 2008)

Pacific countries. Home region competitiveness does not
vary much within a triad region, neither across regions.
Only North American countries show a significant drop in
home region competitiveness. However, North American
countries still have stronger home region competitiveness
than European countries and Asia Pacific countries. There
has been a fall in global competitiveness. Asia Pacific and
European firms have somewhat better global competitive-
ness than North American firms.
It is noteworthy that six countries, namely, the United
States, Italy, Russia, China, India, and Japan report
somewhat different results from other countries. The United
States and Japan have very strong national competitiveness,
but their home region competitiveness is one of the lowest.
J. of the Acad. Mark. Sci. (2012) 40:218–235 227

Table 3 National, home region and global competitiveness by country

National Home region Global

1999 2008 1999 2008 1999 2008

North America
Canada 1.72 1.30 1.86 1.37 0.86 0.71
Mexico −0.08 −0.33 1.94 1.46
United States 1.96 1.48 0.97 0.67

Europe
Austria n/a 1.65 n/a 0.86 1.26 0.92
Belgium 1.18 1.32 1.10 0.86
Denmark 1.66 1.81 1.09 0.86
Finland 1.82 1.68 1.09 0.86
France 1.54 1.31 1.02 0.81
Germany 1.56 1.70 0.97 0.70
Hungary −0.09 −0.31 1.11 0.88
Ireland 0.99 1.05 1.10 0.87
Italy 0.52 −0.15 1.18 1.00
Luxembourg n/a 1.05 n/a 0.87
Netherlands 1.82 1.62 1.07 0.84
Norway 0.96 1.43 1.10 0.86
Poland −0.41 −0.29 1.12 0.90
Portugal 0.25 0.36 1.11 0.88
Russia −1.44 −0.60 1.18 0.98
Spain 0.72 0.65 1.12 0.89
Sweden 1.72 1.78 1.09 0.85
Switzerland 1.67 1.80 1.08 0.85
Turkey n/a −0.20 n/a 0.91
United Kingdom 1.48 1.06 1.04 0.84

Asia Pacific
Australia 1.37 1.30 0.74 0.75 1.35 0.94
China −0.58 0.13 1.00 1.01
India −0.51 0.38 0.86 0.83
Japan 1.30 1.35 0.10 0.49
Malaysia 0.18 0.83 0.78 0.79
Singapore 1.39 1.61 0.77 0.78
South Korea 0.19 1.13 0.80 0.76
Taiwan 0.93 1.13 0.77 0.78
Thailand −0.24 0.12 0.79 0.80

Authors’ calculation based on Global Competitiveness Report by National Economic Forum (1998, 2008)

The national competitiveness of the United States and
Japan always outperforms their regional counterparts, thus
the United States and Japan likely develop their FSAs
based on national competitiveness. This logic also applies,
albeit weakly, to Australia and some European countries
such as France, Germany, Netherlands, and Switzerland. On
the other hand, Italy, Russia, China, and India have weak
national competitiveness, but their home region competi-
tiveness is very strong. In particular, Italy does not have
strong national competitiveness in factor condition, strategy
and rivalry, and macro-conditions; Russia shows low
national competitiveness in factor condition, demand
condition, supporting industries, strategy and rivalry, and
social infrastructure and political institution; the weakness
is in strategy and rivalry in the case of China, and for India,
it is the macro-conditions.
228 J. of the Acad. Mark. Sci. (2012) 40:218–235

Geographic scope of firm specific advantage (sales)

National Home region Global
Global India (75%) (25%) (0%)
(4 firms) Bharat Petroleum; Hindustan Tata Steel.
Petroleum; Indian Oil.

Australia (38%) (50%) (12%)

(8 firms) Telstra; Woolworths; Caltex Australia. Australia & New Zealand Bank; BHP.
Commonwealth Bank of Australia; National
Australia Bank; Westpac Banking.
Canada (8%) (70%) (23%)
(13 firms) George Weston. Bank of Montreal; Bank of Nova Scotia; Bombardier; Magna; Onex.
EnCana; Manulife; and five others.
China (75%) (19%) (13%)
(16 firms) Agricultural Bank of China; China Bank of China; Jardine Matheson; China Hutchison Whampoa; Noble Group.
Construction Bank; China Life Communication Construction.
Insurance; and eight others.
Home region

France (0%) (66%) (34%)

(35 firms) Air France-KLM; Bouygues; Carrefour; CNP Alcatel-Lucent; Alstrom; AREVA;
Assurances; Crédit Agricole; Électricité de Sanofi-Aventis; AXA; Christian Dior;
France; Foncière Euris; and 17 others. Lafarge; L'Oréal; and four others.
Germany (3%) (76%) (21%)
(33 firms) Energie Baden-Württemberg. Allianz; BASF; Bertelsmann; BMW; Bayer; Daimler; Heraeus; Hochtierf;
Commerzbank; Continental; Deutsche Bahn; Siemens; Evonik;
Source of location specific advantage

Deutsche Bank; DHL; and 16 others. Heidelberg Cement.

Italy (0%) (100%) (0%)
(8 firms) Assicurazioni Generali; Intesa Sanpaolo;
Enel; ENI; Fiat; Finmeccanica; Telecom Italy;
(Competitiveness)

UniCredit Group.
Netherlands (0%) (56%) (44%)
(9 firms) Gas Terra; Heineken; Rabobank; Royal KPN; Akzo Nobel; EADS; ING;
Randstad Holding. Royal Ahold.
Russia (57%) (29%) (14%)
(7 firms) Rosneft Oil; Surgutneftegas; Sberbank; SeverStal; Gazprom. Evraz Group.
TNK-BP Holding.
Spain (0%) (82%) (18%)
(11 firms) Cepsa; Group Ferrovial; Iberdrola; Santander; BBVA; Repsol YPF.
Telefonia; Fomento; Mapfre; Acciona;
Gas Natural SDG.
South Korea (13%) (63%) (25%)
(8 firms) Korea Electric Power. Hyundai Motor; POSCO; Samsung C&T; Samsung Elec.; LG Elec.
SK; Doosan.
Switzerland (0%) (36%) (64%)
(11 firms) Adecco; Credit Suisse; Petroplus Holdings; ABB; Holcim; Nestlé; Novartis;
UBS. Roche; Swiss Reinsurance; Xstrata.
Taiwan (25%) (50%) (25%)
(4 firms) Cathay Financial. Asustek Computer; Formosa Petrochemical. Hon Hai Precision Industry.
U.K. (16%) (32%) (52%)
(25 firms) J. Sainsbury; Lloyds TSB; Aviva; Barclays; BT; Centrica; Anglo American; AstraZeneca; BAE
Scottish & Southern Energy; Royal Bank of Scotland; Tesco; Vodafone; Systems; BP; British American
William Morrison Supermarkets. Imperial Tobacco Group. Tobacco; and 8 others.
Japan (24%) (56%) (20%)
(54 firms) East Japan Railway; Idemitsu Kosan; AEON; Aisin Seiki; Dai-ichi Mutual; Denso; Bridgestone; Canon; Honda Motor;
JFE Holdings; Kansai Electric Power; Fujifilm; Fujitsu; Hitachi; Itochu; Seven & I Mazda Motor; Nissan Motor; Ricoh;
KDDI; and 8 others. Holdings; Japan Airlines; and 20 others. Sony; Toyota Motor; and three others.
Domestic

U.S. (29%) (35%) (36%)

(118 firms) Aetna; Allstate; AmerisourceBergen; Hess; American Express; Berkshire 3M; Abbott Laboratories; Accenture;
Bank of America Corp.; Cardinal Hathaway; Best Buy; Boeing; Bristol-Myers Alcoa; Archer Daniels Midland;
Health; CVS Caremark; Comcast; Squibb; Cigna; Cisco Systems; Coca-Cola Bunge; Caterpillar; Citigroup; Coca-
Constellation Energy; and 25 others. Enterprises; ConocoPhillips; and 30 others. Cola; Dell; Delphi; and 31 others.
Note: Values in parentheses under country names are number of firms used in the analysis.

Fig. 3 Firm geographic scope and competitiveness, 2008. Values in parentheses under country names are number of firms used in the analysis

The key finding from Table 3 is that companies that have necessarily venture themselves to access global competi-
weak national competitiveness can tap into their stronger tiveness because costs associated with accessibility are an
home region competitiveness. Therefore companies do not increasing function of physical distance (Vernon 1966),
J. of the Acad. Mark. Sci. (2012) 40:218–235
psychic distance (Johanson and Vehlne 1977), and other
distances (Ghemawat 2007; Berry et al. 2010). In addition
some FSAs are location bound and cannot be transferred to
utilize global competitiveness (Rugman and Verbeke 2001).
Indeed Rugman and Verbeke (2007) note that transferring
FSAs to foreign regions of the triad is particularly difficult
because incremental costs arise from the liability of inter-
regional foreignness.
We integrate the findings from Tables 1 and 3 into an
extended FSA/CSA matrix shown in Fig. 3. The vertical
axis denotes the (potential) source of location specific
advantage (CSAs), and we divide it into national, home
region, and global. The horizontal axis represents the
geographic scope of FSAs. Theoretically, the firm can
transfer its FSAs from domestic to home region to global
market based on a firm’s downstream (marketing) capabil-
ity. We divide firms into three categories: domestic firms
(firms that have less than 10% F/T sales); home region
firms (firms that have more than 60% intra-regional sales
and more than 10% F/T sales); and global firms (firms that
have less than 60% intra-regional sales). The 10% threshold
for domestic firms and the 60% threshold for home region
firms are now widely used in literature and are robust (Gomes
and Ramaswamy 1999; Osegowitsch and Sammartino 2008;
Qian et al. 2010).
India is the only country which has relatively stronger
global competitiveness than its national and home region
competitiveness. This implies that Indian companies have
potential benefits to exploit global (foreign region) CSAs
when they have FSAs. Otherwise they remain local. Three
Indian firms, Bharat Petroleum, Hindustan Petroleum, and
Indian Oil stay local and Tata Steel operates regionally.
Although these firms can possibly exploit global compet-
itiveness, they still remain focused mainly on their local
markets. This implies that these Indian companies should
improve their FSAs to better align these FSAs with
favourable global CSAs. As an example, Khanna and
Palepu (2004) show that capable Indian software firms
often access global capital markets, because of insufficient
capital market in India.
Most countries have either strong national and home
region competitiveness (developed countries) or weak
national but strong home region competitiveness (devel-
oping countries). This implies that these firms should
focus on their home region (and domestic market for
those developed country firms) CSAs to develop their
FSAs. If a firm can transfer any of its FSAs developed
from the home region CSAs, to a foreign region, then the
firm can operate on a global basis. When its FSAs are
location bound, the firm focuses on home region
229
countries. Indeed, most firms stay in the home region,
but some Swiss and U.K. firms successfully extend their
downstream FSAs to global.
Most formerly state-owned Chinese and Russian utility
firms and banks stay in domestic markets because they
have weak FSAs based on government protection. These
are not transferable to other countries even within their
home region. Although these firms have access to favour-
able home region competitiveness, they are unable to
compete with their home region rivals because of weak
FSAs. Like China and Russia, Italy provides one of the
weakest national competitiveness scores. However Italian
firms develop their FSAs in design, marketing, and
technology that can be developed from and transferred to
home region markets. Therefore Italian firms successfully
operate within the home region.
As mentioned earlier, the United States and Japan are
two countries that have strong national competitiveness, but
relatively weak home region and global competitiveness.
Australia, France, Germany, Netherlands, and Switzerland
also show the same tendency with the United States and
Japan, but their home region competitiveness is not
significantly lower than their home region counterparts.
This implies that American and Japanese firms can leverage
their superior national CSAs to internationalize their
activities when they have strong FSAs. Otherwise these
firms focus on their domestic markets. Some American and
Japanese firms focus on their home countries (24% and
29% respectively), whereas others focus either on the
home region (56% and 35% respectively) or a foreign
region (20% and 36% respectively). Different companies
in the same country can have different levels of
marketing capability that determine the geographic reach
of their sales.
Conclusions
In this paper, we analyze international competitiveness by
using a modified FSA/CSA matrix. This is an extension of
Rugman (1981)’s FSA/CSA matrix and Rugman and
D’Cruz’s (1993) double diamond model. We also provide
empirical evidence to demonstrate the merits and usefulness
of the FSA/CSA matrix by calculating aspects of the CSAs
and FSAs of these as they determine international compet-
itiveness. In doing so, we focus on the FSAs of the Fortune
Global 500 firms based on the geographic scope of sales,
and the CSAs based on the locational competitiveness at
three different levels: country (national), home region
(region), and global. Our empirical analysis provides a
230
number of interesting findings about the nature and extent
on international competitiveness
First, our investigation of the FSAs of the set of 500
large firms across their home countries within each of the
broad regions of the triad reveals some interesting trends in
international competitiveness at firm-level. The changes in
the ratio of foreign (F) to total (T) sales (F/T) and the intra-
regional (R) sales (R/T) from 1999 to 2008 indicate that the
world’s 500 firms became more international over this ten-
year period, as their average F/T increased 33% to 40.8%.
A major driver here is the importance of the 142 U.S. firms
with an F/T in 2008 of 30.3%, a significant increase from
the F/T of 23% for 178 U.S. firms in 1999. We also find that
the average intra-regional sales of the 500 firms remain
high at 74.6% in 2008, compared with that in 1999
(76.4%). Changes in the international assets of these MNEs
also point to similar trends. Again, F/T for assets increased
from 28.4% in 1999 up to 36% in 2008. Intra-regional
assets were at 75.5% in 2008, as compared to 78.7% in
1999. Together, these results imply that the world’s largest
500 firms have increased their firm-level international
competitiveness. However, much of this is still being
achieved within their home region.
We also look at the CSAs at country, home region, and
global-level, based on the various aspects of diamond
determinants and their relative importance. We find that
countries have different sources of CSAs in their interna-
tional competitiveness: indeed it is very important to look at
the multi-faceted nature of national, home region, and
global competitiveness because MNEs seek not only
markets but also resources, efficiency, and strategic-assets
(Dunning 1993). One of our key findings is that home
region competitiveness and global competitiveness do not
vary much by country although national competitiveness
does. Since many MNEs can find favorable diamond
conditions in the home region, they may not be motivated
to take risks in foreign regions under the presence of the
liability of inter-regional foreignness (Rugman and Verbeke
2007). In short, international competitiveness is a multi-
faceted concept that brings together firm and country level
factors that need to be analyzed carefully in order to
understand the complexities of the interactions of CSAs and
FSAs.
Finally, our modified FSA/CSA matrix (Fig. 3) shows that
the majority of large firms do not have global dimension in
their international competitiveness in sales. Despite the
magnitude of their international sales and presence, the
competitiveness of these MNEs is mainly achieved within
the home region of the firm. Most firms develop the source
of location specific advantages from their home region and
J. of the Acad. Mark. Sci. (2012) 40:218–235
operate within their home region. Except for a few firms, it
seems that most MNEs cannot transfer national or home
region competitiveness to foreign region.
Limitations and future research
Although this study provides a new analysis for national,
home region, and global competitiveness that broadens our
perspective on international competitiveness, it is not
without its limitations. We could not investigate factors
that enable or disable MNEs from transferring their
competitiveness to other countries or regions. The literature
suggests that the factors are either firm specific such as firm
size, marketing capability, technological knowhow, mana-
gerial capability, and financial capability, or country specific
such as physical distance, cultural distance, institutional
distance, and economic distance. Future research should
look inside firm- and country- specificities as well as at
regional and global ones such as regional institutions, the
world financial crisis, and political relations. In addition, a
dynamic view of international competitiveness should be
added to the static view of competitiveness (Narula 1993).
In particular, if some MNEs could improve their FSAs on a
global dimension, then it is a very important theoretical and
empirical question to ask how precisely such MNEs can
achieve global FSAs and whether such global FSAs
improve performance or not.
Implications to international marketing research
These limitations notwithstanding, we believe that our
findings offer useful insights for future research on interna-
tional marketing activities of MNEs. An integrative consider-
ation of FSAs and CSAs is necessary because, as our results
indicate, MNEs leverage not only their FSAs, but also
competitive advantages derived from the CSAs across levels,
as they internationally market their products/services. The
modified FSA/CSA matrix based on Rugman and D’Cruz’s
(1993) double diamond model provides a more sophisticated
perspective for such a holistic investigation, taking into
account the multi-faceted nature of international competi-
tiveness. As such, we suggest that the modified FSA/CSA
matrix proposed herein will facilitate future marketing
research based on international competitiveness.
Specifically, we propose three research streams in
international competitiveness and international marketing.
First, market entry research should consider the regional
aspect of international competitiveness. Countries within a
region usually share similar CSAs, therefore MNEs are
likely to decide a region to enter first, and then find a
J. of the Acad. Mark. Sci. (2012) 40:218–235
specific country or location. A nested logit model with
region and country would be suitable in order to capture the
entry decision process of MNEs. The locational cost
benefits provided by countries in a region are correlated
(Head and Mayer 2004). Likewise entry mode research can
also accommodate international competitiveness at subsid-
iary level. Although an MNE may not have strong FSAs,
high regional competitiveness enables the MNE to use an
ownership entry mode into a home region country.
Second, it would be important to discover the benefits of a
regional marketing program in the presence of regional
integration and regional competitiveness. The benefits are
not only limited to the cost savings by utilizing scale and
standardization. The role of regional marketing or a regional
headquarters is in connecting the standardized strategy of
corporate headquarters with diverse country environments
and local responsiveness in the region (Daniel 1987;
Halliburton and Hünerberg 1993; Yeung et al. 2001).
Third, as an extension of the second stream, the evolution-
ary view of marketing strategy along with changes in
international competitiveness deserves more scholarly atten-
tion. Literature on international marketing tends to focus on
the entry stage into international markets. However, it is very
likely that marketing strategy shifts at the expansion stage,
from identifying markets overseas for existing products and
services to leveraging potential economies of scale in
developing local markets and increasing potential synergies
across subsidiaries within an MNE (Douglas and Craig 1989).
This concept can be readily applied to regional and global
strategies (e.g., Chetty and Campbell-Hunt 2003). It is
expected that a regional MNE does not need to differentiate
its marketing strategy in the entry and expansion stages
because of the homogeneity of consumers and integration of
regional economy, whereas a global MNE needs to.
In so doing, future studies may conceptualize and
operationalize international competitiveness based on the
proposed FSA/CSA matrix. Our study also suggests
possible data sources and variables to measure the FSA
(the geographic scope of firm sales and assets) and the CSA
(variables from the World Economic Forum’s Global
Competitiveness Reports). International marketing research-
ers should further validate and adopt specific measures in
the context of their own research problems and setting. As
our empirical analysis has demonstrated, the nature and
specificity of international competitiveness evolve over
time, so the availability of longitudinal datasets (e.g.,
231
WEF GCR) should facilitate the future investigation of
the dynamic perspective of international competitiveness.
In the meantime, the multidimensionality of the interna-
tional competitiveness construct suggests that researchers
should take into account each dimension in their study even
if their focus is on a specific subset of the international
competitiveness dimensions.
Implications to managers
Our findings also have some significant implications for
managers. In addition to the need for consideration of the
multi-faceted nature of various FSAs and CSAs, a new
insight emerges for strategic marketing planning and
implementation in international markets. An MNE can
improve its economies of scale and scope by integrating its
activities in home region countries to achieve cost-
effectiveness in the application of its marketing strategy.
The MNE may promote standardized product and service in
the same way within its home region because home region
customers are likely ready to access its products and
services without significant modifications. The MNE’s cost
involved in transferring and utilizing its strategy and FSAs
is likely an increasing function of geographic, psychic,
institutional, and economic distances (Theodosiou and
Katsikeas 2001). Managers should understand the reality
and liability of being a global firm.
Being a global firm demands strong FSAs. On the one
hand, a firm can develop superior products or very low cost
products, which can be readily accepted by global
customers. However such products rarely exist due to
rapidly changing business environments in competition,
technology and customer taste. On the other hand, a firm
may develop its localization strategy by adapting to differ-
ences in each country. However incremental coordination
costs and the liability of foreignness make firms unable to
pursue a localization strategy exclusively. Thus the rhetoric
‘think global, and act local’ is not the best strategy for firms
in business. A regional solution can be a more manageable
alternative to a global strategy (Morrison et al. 1992). In
other words, international competitiveness depends to a
great extent on a firm’s capability to build FSAs based upon
national and home region CSAs, and to exploit these FSAs
regionally. As such, the development of international
competitiveness should not be confused with reckless
globalization.
232 J. of the Acad. Mark. Sci. (2012) 40:218–235

Appendix 1 Components of national competitiveness

Components Sub-components Loading factor

Factor conditions (α=0.976) Ease of access to loan 0.816

Financing through local equity market 0.780
Financial market sophistication 0.864
Venture capital availability 0.888
Staff training 0.908
Quality of management school 0.793
Tertiary school enrollment 0.633
Quality of infrastructure 0.920
Quality of port infrastructure 0.854
Quality of railroads 0.826
Quality of roads 0.856
Computers per 100 population 0.696
Quality of telephone infrastructure 0.844
Company spending on R&D 0.915
Capacity of Innovation 0.900
University-industry research collaboration 0.940
Quality of scientific research institutions 0.889
Firm-level technology absorption 0.855
Demand conditions (α=0.874) Buyer sophistication 0.942
Degree of customer orientation 0.942
Supporting industries (α=0.928) Control of international distribution 0.883
Production process sophistication 0.908
Local supplier quality 0.930
Local supplier quantity 0.909
Strategy, structure, rivalry (α=0.915) Effectiveness of anti-monopoly policy 0.903
Efficacy of corporate board 0.809
Intensity of local competition 0.852
Strength of auditing and reporting standards 0.917
Restriction of capital flows 0.713
Prevalence of trade barriers 0.836
Macroeconomic policy (α=0.694) Government surplus/deficit 0.589
Inflation (reverse-coded) 0.864
Interest rate spread (reverse-coded) 0.878
Social infra & political institutions (α=0.955) Judicial independence 0.904
Favoritism in decisions of government officials 0.909
Wastefulness of government spending 0.839
Public trust of politicians 0.952
Organized crime 0.785
Intellectual property protection 0.890
Reliability of police services 0.925
J. of the Acad. Mark. Sci. (2012) 40:218–235 233

Appendix 2 Components of national competitiveness by country in 2008

Total Micro-conditions (Diamond) Macro-conditions

Factor condition Demand Supporting Strategy & Macroeconomic Social infra. &
(0.976) condition (0.874) industries (0.928) rivalry (.915) policy (0.694) political inst. (.955)

North America
Canada 1.303 1.431 1.235 1.202 1.265 0.271 1.187
Mexico −0.334 −0.556 0.020 −0.014 −0.195 0.198 −0.954
United States 1.481 1.938 1.497 1.763 1.410 0.180 0.593

Europe
Austria 1.653 1.297 1.646 1.885 1.736 0.285 1.486
Belgium 1.320 1.400 1.254 1.422 1.380 0.275 0.941
Denmark 1.806 1.874 1.497 1.603 1.613 0.486 2.139
Finland 1.681 1.747 1.086 1.409 1.699 0.629 2.112
France 1.311 1.394 0.955 1.820 1.243 0.142 0.998
Germany 1.718 1.646 1.179 2.219 1.805 0.335 1.491
Hungary −0.315 −0.112 −1.045 −0.361 0.379 0.066 −0.409
Ireland 1.050 0.839 1.029 0.848 1.371 0.192 1.032
Italy −0.152 −0.247 0.188 0.793 −0.718 −0.122 −0.688
Luxembourg 1.047 0.907 0.862 0.461 1.226 0.387 1.585
Netherlands 1.617 1.547 1.235 1.653 1.714 0.203 1.759
Norway 1.435 1.319 1.160 1.292 1.075 1.158 1.792
Poland −0.279 −0.405 −0.185 0.084 −0.145 0.191 −0.773
Portugal 0.359 0.472 −0.055 0.238 0.511 0.070 0.609
Russia −0.596 −0.294 −0.372 −0.610 −0.905 0.405 −0.895
Spain 0.652 0.594 0.506 0.919 0.649 0.204 0.487
Sweden 1.784 1.856 1.422 1.525 1.943 0.480 1.860
Switzerland 1.803 1.920 1.740 2.081 1.082 0.514 1.870
Turkey −0.201 −0.283 −0.298 0.236 −0.115 0.139 −0.554
United Kingdom 1.064 1.348 0.749 1.039 1.347 0.225 0.667

Asia Pacific
Australia 1.295 1.183 1.104 0.891 1.530 0.180 1.629
China 0.127 0.087 0.432 0.291 −0.328 0.293 0.058
India 0.376 0.188 0.394 0.865 0.605 −0.160 −0.115
Japan 1.354 1.194 1.908 2.098 0.769 0.244 0.606
Malaysia 0.832 0.974 0.843 0.928 0.538 0.123 0.788
Singapore 1.614 1.663 1.422 0.805 1.608 0.632 2.228
South Korea 1.127 1.423 1.291 1.104 0.727 0.512 0.802
Taiwan 1.127 1.308 1.627 1.360 0.639 0.378 0.463
Thailand 0.120 0.116 0.431 0.203 −0.182 0.099 0.014

Values in parentheses under column titles are the second-order loading factors from the two-stage principal component analysis

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