Why MNCs tend to concentrate their activities in their home region

Abstract

Purpose

The current paper seeks to analyze to what degree theories from different fields of social science are able to explain the home‐region orientation of MNCs. This is necessary since there has been only a relatively narrow, economics‐oriented explanation for such an orientation.

Design/methodology/approach

The analysis is based on a thorough review of the literature that refers to a MNC's home‐region orientation and on different theories from the social sciences.

Findings

The paper shows that several theories from economics, psychology, and sociology are able to explain an MNC's home‐region orientation.

Research limitations/implications

The paper contributes to the development of a more multi‐faceted explanation of why MNCs generally prefer a home‐region orientation. The paper derives propositions that are consistent with each theory. These propositions can be tested empirically in subsequent research studies.

Originality/value

The paper discusses a number of different theories and streams of research that can be used to conceptually explain and gain insight into the phenomenon of a home‐region orientation for MNCs

Citation

Wolf, J., Dunemann, T. and Egelhoff, W.G. (2012), "Why MNCs tend to concentrate their activities in their home region", Multinational Business Review, Vol. 20 No. 1, pp. 67-91. https://doi.org/10.1108/15253831211217215