Academic journal article Multinational Business Review

Regional and Global Alliance Network Structures of Triad Multinational Enterprises

Academic journal article Multinational Business Review

Regional and Global Alliance Network Structures of Triad Multinational Enterprises

Article excerpt

Abstract:

This study analyzes the structure of regional and global alliance networks of multinationals. It examines the network structure of 172 Triad (U.S., Western European, and Japanese) multinationals during 2001-2003 and how it affects subsequent corporate performance during 2004-2006. We study a framework of regional/global strategies based on the social network view of relational ties among firms. Thus, we offer a new perspective to the growing literatures on the regional/global strategies and internationalization of alliance networks.

Key Words: Regional/global strategies; structure of international alliance networks; social networks theory

INTRODUCTION

Do multinational enterprises (MNEs) form alliance networks mostly with regional or global partners? How does the position of an MNE in such networks matter? What kinds of MNEs pursue each type of alliance network? These are the research questions at the heart of our study. Recent research has confirmed that "networks are reshaping the global business architecture" (Parkhe, Wasserman, and Ralston 2006, 560); and economic sociology has emphasized the importance of social networks for economic actors (Granovetter 1985) because firms are relational entities (O'Reilly 1991). According to the relational view of MNE activities, MNEs can be viewed as actors in networks of alliances (Granovetter 1985; Lavie 2007; Parkhe et al. 2006). "Social network perspectives conceive of actors (such as firms) as interdependent, and place emphasis on the social, economic, or political network structures of ties that provide actors with opportunities and constraints" (Lavie 2007). This is the first study in the regional/global strategies literature to explore the different categories of alliance networks of MNEs and their structures using a social network perspective.

An alliance is any "voluntary arrangement between firms involving exchange, sharing, or co-development of products, technologies, or service" (Gulati 1998, 293); and an alliance network is the collection of direct alliance partnerships through which an MNE pursues its international strategies (Lavie and Miller 2008). Since any type of alliance can provide benefits to an MNE from the access to new resources (Schilling and Phelps 2007), we use this broad definition of alliances to capture the full scope of alliance networks of MNEs.

Recent research demonstrates that MNEs tend to generate most of their sales revenues from their home regions (Rugman and Verbeke 2004). Hence, a further understanding of the regional and global dimensions of alliances is important. MNEs form international alliances with regional partners, global partners, or both. By "regional partner," we mean an alliance partner located in a country within the home region but outside the home country of the focal MNE (Rugman andVerbeke 2008). For instance, when Air Liquide, a French firm, partners with BOC Group, a British-based firm, we consider BOC to be a "regional partner" for Air Liquide, as Britain is in Europe, the home region for Air Liquide. Conversely, by "global partner," we mean an alliance partner located in a country outside the home region of the focal firm (Rugman and Verbeke 2008). For instance, when Air Liquide partners with Praxair Inc., a U.S.-based firm, we consider Praxair to be a "global partner" for Air Liquide, as the U.S. is outside Air Liquide's European home region.

Lastly, we take a focused approach to "network structure" and study the MNE alliance network in terms of network centrality (Bonacich 1987; Freeman 1979) and structural holes (Burt, 1992). The importance of the MNE alliance network can be identified through the firm's ability to exert influence (due to its centrality) or access entrepreneurial resources (due to its span of structural holes). Based on our understanding of the MNE alliance networks, these two sets of network characteristics do not encompass the full potential value of the social network perspective. …

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