A new framework for global expansion

Hwy‐Chang Moon (The Graduate School of International Studies (GSIS), Seoul National University, Seoul, Korea)
Min‐Young Kim (Department of Business Administration, University of Illinois at Urbana‐Champaign, Champaign, Illinois, USA)

Management Decision

ISSN: 0025-1747

Publication date: 8 February 2008

Abstract

Purpose

The main purpose of this paper is to introduce a comprehensive model explaining the global expansion of firms and to find out viable strategies for firms to survive global competition.

Design/methodology/approach

Through the critical review over existing literature, this study first introduces a new framework explaining the global expansion of firms 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 findings confirm the new model's 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 firm is positively correlated with its financial 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 diversification‐coordination model, managers can recognize the level and characteristics of their firms' global expansion, not only at the firm level but also at the functional level. This allows managers to establish a global strategy tailored to each function, thus reconciling possible conflicts generated from different interests among different functions in the firm.

Originality/value

First, this article introduces a new perspective of analyzing the global expansion of firms by shifting the level of analysis from the firm 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 firms.

Keywords

Citation

Moon, H. and Kim, M. (2008), "A new framework for global expansion", Management Decision, Vol. 46 No. 1, pp. 131-151. https://doi.org/10.1108/00251740810846789

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.