Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Global expansion all about give and take, study finds

26.07.2012
The key to successful global business expansion is spreading operations across multiple countries, rather than trying to dominate a region or market, according to a new study led by Michigan State University researchers.
In addition, since global expansion is costly for service industries, manufacturing industries will profit most, said Tomas Hult, director of MSU’s International Business Center.

Led by Hult and Ahmet Kirca, associate professor of marketing, the study is the largest ever conducted to examine the effect of multinationality on firm performance, Hult said. It incorporates data from nearly 48,000 firms.

The results are published in the latest edition of Global Strategy Journal. This is the third and final study conducted by Hult, Kirca, colleagues and graduate students. The other two articles were published in the Academy of Management Journal and in the Journal of Management.

“It’s very clear, through this research, that the more multinational you are, the more likely you are to perform well over time,” Hult said. “Being multinational today is much more important than it was 10 or 15 years ago, partly because of the knowledge economy that we’re in.”

But only a handful of companies are truly global, he said. Often misunderstood among management, global strategy means coordinating efforts across all countries in which the business practices, not just running a business from a headquarters.

“It would be highly inefficient if a business is in 100 countries and everything has to go through one place,” Hult said. “You have much more leverage and synergy if you have a coordinated effort among countries you’re in, so there’s learning and give and take. What works? What doesn’t? ”

While there’s no magic number of countries that determines success, if a business operates in more than a dozen countries, and especially in more than 30, companies must have a global strategy, Hult said.

The researchers also found that firm, industry and country characteristics define the relationship between multinationality and performance.

Specifically, if a country expands internationally for the right reasons – to diversify, not to extend the life of an obsolete product, for example – there’s a better chance of success. And if there’s good infrastructure to support expansion, such as physical infrastructure, government resources and human resources, that helps.

As such, firms from advanced economies will fare better than those from developing economies, Hult said. But there are only about 30 countries with infrastructure similar to the U.S.

Other key findings:
Globalization will generate revenue, but not necessarily maximize profit.
Companies will benefit most in the intermediate stages of internalization, rather than in the early and late stages.
Firm size doesn’t affect the success of multinationality.

Researchers from University of Southern California; University of New Hampshire; St. John Fisher College; University of Mississippi; University of Southern Mississippi; George Mason University; and Rochester Institute of Technology also contributed to the study.

Michigan State University has been working to advance the common good in uncommon ways for more than 150 years. One of the top research universities in the world, MSU focuses its vast resources on creating solutions to some of the world’s most pressing challenges, while providing life-changing opportunities to a diverse and inclusive academic community through more than 200 programs of study in 17 degree-granting colleges.

Kristen Parker | EurekAlert!
Further information:
http://www.msu.edu

More articles from Studies and Analyses:

nachricht Some brain tumors may respond to immunotherapy, new study suggests
11.12.2018 | Columbia University Irving Medical Center

nachricht Climate change and air pollution damaging health and causing millions of premature deaths
30.11.2018 | International Institute for Applied Systems Analysis (IIASA)

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Data use draining your battery? Tiny device to speed up memory while also saving power

The more objects we make "smart," from watches to entire buildings, the greater the need for these devices to store and retrieve massive amounts of data quickly without consuming too much power.

Millions of new memory cells could be part of a computer chip and provide that speed and energy savings, thanks to the discovery of a previously unobserved...

Im Focus: An energy-efficient way to stay warm: Sew high-tech heating patches to your clothes

Personal patches could reduce energy waste in buildings, Rutgers-led study says

What if, instead of turning up the thermostat, you could warm up with high-tech, flexible patches sewn into your clothes - while significantly reducing your...

Im Focus: Lethal combination: Drug cocktail turns off the juice to cancer cells

A widely used diabetes medication combined with an antihypertensive drug specifically inhibits tumor growth – this was discovered by researchers from the University of Basel’s Biozentrum two years ago. In a follow-up study, recently published in “Cell Reports”, the scientists report that this drug cocktail induces cancer cell death by switching off their energy supply.

The widely used anti-diabetes drug metformin not only reduces blood sugar but also has an anti-cancer effect. However, the metformin dose commonly used in the...

Im Focus: New Foldable Drone Flies through Narrow Holes in Rescue Missions

A research team from the University of Zurich has developed a new drone that can retract its propeller arms in flight and make itself small to fit through narrow gaps and holes. This is particularly useful when searching for victims of natural disasters.

Inspecting a damaged building after an earthquake or during a fire is exactly the kind of job that human rescuers would like drones to do for them. A flying...

Im Focus: Topological material switched off and on for the first time

Key advance for future topological transistors

Over the last decade, there has been much excitement about the discovery, recognised by the Nobel Prize in Physics only two years ago, that there are two types...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

ICTM Conference 2019: Digitization emerges as an engineering trend for turbomachinery construction

12.12.2018 | Event News

New Plastics Economy Investor Forum - Meeting Point for Innovations

10.12.2018 | Event News

EGU 2019 meeting: Media registration now open

06.12.2018 | Event News

 
Latest News

Data use draining your battery? Tiny device to speed up memory while also saving power

14.12.2018 | Power and Electrical Engineering

Tangled magnetic fields power cosmic particle accelerators

14.12.2018 | Physics and Astronomy

In search of missing worlds, Hubble finds a fast evaporating exoplanet

14.12.2018 | Physics and Astronomy

VideoLinks
Science & Research
Overview of more VideoLinks >>>