Is It All a Matter of Grouping? Examining the Regional Effect in Global Strategy Research*

Over the past decades terms such as regionalism, regionalization, ‘regional multinationals’, and ‘liability of regional foreignness’ have populated International Business and Global Strategy research. Notwithstanding their popularity, the definition of the term ‘region’ is ambiguous, which results in a lack of systematic use in research as well as in the insights generated from this construct. How can one define ‘region’? Can the same regional category be used for research projects with completely different goals? Will drawing on different definitions of regional categories lead to different results and conclusions? We tackle these issues by first reviewing how social science research has defined region as well as how the construct has been used in global strategy research. Then we discuss, as an exemplification of the multiple definitions of region, how different regional categorizations paint different pictures of the degree to which US multinational firms have become more global or regional in the last two decades. We conclude with some insights on the next steps that global strategy should take when using the construct of region. *Please contact Ruth V. Aguilera regarding this paper, which is forthcoming later in 2007 as a book chapter in International Strategic Management: A New Generation, Stephen Tallman, ed., Edward Elgar Publishers: Northampton, MA. Published: February 15, 2007 URL: http://www.business.uiuc.edu/Working_Papers/papers/07−0106.pdf IS IT ALL A MATTER OF GROUPING? EXAMINING THE REGIONAL EFFECT IN GLOBAL STRATEGY RESEARCH* This Draft: February 15, 2007 Ruth V. Aguilera Ricardo G. Flores Paul M. Vaaler Department of Business Administration College of Business University of Illinois at Urbana-Champaign 350 Wohlers Hall 1206 South Sixth Street Champaign, IL 61820 Tel (217) 333-7090 Fax (217) 244-7969 Email [email protected] Email [email protected] Email [email protected] *Please contact Ruth V. Aguilera regarding this paper, which is forthcoming later in 2007 as a book chapter in International Strategic Management: A New Generation, Stephen Tallman, ed., Edward Elgar Publishers: Northampton, MA. 1 Is it all a matter of grouping? Examining the regional effect in Global Strategy Research ABSTRACT Over the past decades terms such as regionalism, regionalization, ‘regional multinationals’, and ‘liability of regional foreignness’ have populated International Business and Global Strategy research. Notwithstanding their popularity, the definition of the term ‘region’ is ambiguous, which results in a lack of systematic use in research as well as in the insights generated from this construct. How can one define ‘region’? Can the same regional category be used for research projects with completely different goals? Will drawing on different definitions of regional categories lead to different results and conclusions? We tackle these issues by first reviewing how social science research has defined region as well as how the construct has been used in global strategy research. Then we discuss, as an exemplification of the multiple definitions of region, how different regional categorizations paint different pictures of the degree to which US multinational firms have become more global or regional in the last two decades. We conclude with some insights on the next steps that global strategy should take when using the construct of region.Over the past decades terms such as regionalism, regionalization, ‘regional multinationals’, and ‘liability of regional foreignness’ have populated International Business and Global Strategy research. Notwithstanding their popularity, the definition of the term ‘region’ is ambiguous, which results in a lack of systematic use in research as well as in the insights generated from this construct. How can one define ‘region’? Can the same regional category be used for research projects with completely different goals? Will drawing on different definitions of regional categories lead to different results and conclusions? We tackle these issues by first reviewing how social science research has defined region as well as how the construct has been used in global strategy research. Then we discuss, as an exemplification of the multiple definitions of region, how different regional categorizations paint different pictures of the degree to which US multinational firms have become more global or regional in the last two decades. We conclude with some insights on the next steps that global strategy should take when using the construct of region.