Spreading operation to various countries key to successful global expansion: Study
Washington, July 26 (ANI): The answer to successful global business expansion lies in spreading operations across various countries, rather than dominating a region or market, according to a new study.
According to a study led by Michigan State University researchers, since global expansion is costly for service industries, manufacturing industries will profit most.he research led by Tomas Hult, director of MSU's International Business Center, and Ahmet Kirca, associate professor of marketing, the study is the largest ever conducted to examine the effect of multi-nationality on firm performance.
"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," he added.
"But only a handful of companies are truly global", he said.
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 multi-nationality 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. (ANI)
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