The MNE as a Portfolio: Path-Dependence and Interdependencies in MNE Growth Trajectory
Posted: 4 Sep 2008 Last revised: 13 May 2010
Date Written: September 3, 2008
We conceptualize the MNE as a portfolio of interdependent sub-units and examine its growth trajectory in relation to its existing portfolio. The empirical testing is based on a unique dataset that details all the location moves of US legal-services MNEs during 1949-2006. These MNEs evolve in directions that follow from their past. Their portfolios affect their subsequent moves, speaking for the impact of interdependencies among sub-units on the evolution of MNEs. The portfolio exercises stronger impact on entry than on exit, suggesting that different forces affect MNEs’ expansion and contraction. We outline strategic and organizational implications of the MNE as a portfolio.
Keywords: Location portfolio, MNE location choices, path dependence, international expansion, legal service MNEs, discrete time hazard model
Suggested Citation: Suggested Citation