International Expansion, Diversification and Regulated Firm Nonmarket Strategy
Version of Record online: 21 DEC 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Volume 34, Issue 6, pages 379–396, September 2013
How to Cite
Urbiztondo, S., Bonardi, J.-P. and Quélin, B. V. (2013), International Expansion, Diversification and Regulated Firm Nonmarket Strategy. Manage. Decis. Econ., 34: 379–396. doi: 10.1002/mde.2598
- Issue online: 4 JUL 2013
- Version of Record online: 21 DEC 2012
- Manuscript Accepted: 28 NOV 2012
- Manuscript Received: 16 AUG 2012
Previous studies have shown that regulated firms diversify for reasons that are different than for unregulated firms. We explore some of these differences by providing a theoretical model that starts by considering the firm–regulator relationship as an incomplete information issue, in which a regulated incumbent has knowledge that the regulator does not have, but the firm cannot convey hard information about this knowledge. The incumbent faces both market and nonmarket competition from a new entrant. In that context, we show that when the firm faces tough nonmarket competition domestically, going abroad can create a mechanism that makes information transmission to the regulator more credible. International expansion can thus be a way to solve domestic nonmarket issues in addition to being a catalyst for growth. Copyright © 2012 John Wiley & Sons, Ltd.