We advance a dynamic institution-based view of the firm that extends the theory

Despite the emerging consensus that most multinational enterprises (MNEs) are regional, systematic theory explaining regionalization is conspicuously absent, and empirical findings on its implications for MNE performance remain mixed. Drawing on internalization theory, we suggest that technological advantage and institutional diversity determine firms' home-region orientation (HRO), and we posit a simultaneous relationship between HRO and performance. We apply insights from the firm heterogeneity literature of international trade to explain the influence of technology on HRO. We predict a negative and nonlinear impact of technological advantage on HRO driven by increasing returns logic, and a negative impact of institutional diversity on HRO driven by search and deliberation costs. We find empirical support for our model using simultaneous equations methodology on longitudinal data on Triad-based MNEs. Performance significantly reduces HRO, but HRO does not have a significant effect on performance.

Do family firms benefit more from a regional or a global geographic scope? We suggest it depends on their family leadership type -family vs non-family leadership. We offer a nuanced view of agency and stewardship theories to hypothesize that family leaders are most beneficial when pursuing a regional strategy (i.e., high home-region focus (HRF)), whereas non-family leaders are more advantageous when pursing a global strategy (i.e., low HRF). Utilizing a sample of 202 Western European firms from 1996 to 2006, we find support for this central hypothesis. Thus family leadership influences the degree to which family firms benefit from HRF.