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Intangible Assets and the Network Structure of MNCs
Author(s) -
Doukas John Yannis,
Pantzalis Christos,
Kim Sungsoo
Publication year - 1999
Publication title -
journal of international financial management and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.818
H-Index - 37
eISSN - 1467-646X
pISSN - 0954-1314
DOI - 10.1111/1467-646x.00040
Subject(s) - multinational corporation , diversification (marketing strategy) , business , foreign direct investment , industrial organization , business operations , economic geography , marketing , economics , finance , macroeconomics
This paper examines the nature of the relationship between corporate intangible assets and the multinational network structure of the firm. Specifically, the question addressed in this paper is whether the nature of corporate intangible assets determines the mode of geographic expansion of the MNC. The interactive effects between the level and type of corporate intangibles and the foreign expansion path of MNCs are also examined. Based on the analysis of 362 MNCs, representing 88 three‐digit SIC industries, the results of this study show that R&D‐intensive MNCs maintain substantially more geographically diversified and less geographically focused operating networks than advertising‐intensive MNCs. Furthermore, R&D‐intensive MNCs' foreign investments create more value through geographic diversification, while non‐R&D‐intensive MNCs benefit the most by increasing the geographic focus of their foreign investment activities. We also document that MNCs without significant levels of technology know‐how and marketing based intangible assets can benefit the most from geographic‐focused rather than geographic‐diversified foreign business operations.