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International Expansion, Diversification and Regulated Firm Nonmarket Strategy

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  • Urbiztondo, Santiago
  • Bonardi , Jean-Philippe
  • Quelin , Bertrand V.

Abstract

Previous studies have shown that regulated firms diversify for reasons that are different than for unregulated firms. We explore some of these differences by providing a theoretical model that starts by considering the firm-regulator relationship as an incomplete information issue, in which a regulated incumbent has knowledge that the regulator does not have, but the firm cannot convey hard information about this knowledge. The incumbent faces both market and nonmarket competition from a new entrant. In that context, we show that when the firm faces tough nonmarket competition domestically, going abroad can create a mechanism that makes information transmission to the regulator more credible. International expansion can thus be a way to solve domestic nonmarket issues in addition to being a catalyst for growth.

Suggested Citation

  • Urbiztondo, Santiago & Bonardi , Jean-Philippe & Quelin , Bertrand V., 2012. "International Expansion, Diversification and Regulated Firm Nonmarket Strategy," HEC Research Papers Series 989, HEC Paris.
    • Handle: RePEc:ebg:heccah:0989
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    Cited by:

    1. Thomas Wrona & Corinna Sinzig, 2018. "Nonmarket strategy research: systematic literature review and future directions," Journal of Business Economics, Springer, vol. 88(2), pages 253-317, February.
    2. Wu Wei & Xuan Zhao & Mei Li & Malcolm Warner, 2016. "Integrating nonmarket and market resources, strategy and performance in Chinese enterprises: a review of the field and a resource-based empirical study," Asia Pacific Business Review, Taylor & Francis Journals, vol. 22(2), pages 220-237, April.

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    More about this item

    Keywords

    Regulation; nonmarket strategy; international investments; diversification;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General

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