Geographic scope and multinational enterprise performance

Authors

  • Anthony Goerzen,

    Corresponding author
    1. Faculty of Business, University of Victoria, Victoria, British Columbia, Canada
    • Faculty of Business, University of Victoria, Room 216, PO Box 1700, STN CSC, Victoria, BC, Canada V8W 2Y2.
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  • Paul W. Beamish

    1. Richard Ivey School of Business, University of Western Ontario, London, Ontario, Canada
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Abstract

Through an internalization theory lens, an argument is developed to suggest that the traditional concept of geographic scope should be split into two related, but more precise, elements of international asset dispersion and country environment diversity. Subsequently, these new concepts are tested using a structural equation modeling approach on a sample of 580 large multinational enterprises (MNEs). We find that the relationship between economic performance and international asset dispersion is positive, but that country environment diversity is negatively associated with performance, with a positive interaction between them. This study adds to our theoretical understanding of MNEs, and also provides a bridge between the mixed findings of prior research on multinationality by disentangling the unique effects of the latent subcomponents of geographic scope on firm performance. Copyright © 2003 John Wiley & Sons, Ltd.

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