How the spatial dispersion and size of country networks shape the geographic distance that firms add during international expansion

This study looks at the geographic distance that multinational enterprises add beyond the confines of their existing country network when they expand internationally. It remains unclear why we observe great variation in the amounts of geographic distance that firms add to their country networks even when they operate in similar industries and face comparable challenges in overcoming physical distance. Drawing on experiential learning theories and the literature on subsidiary network management, I argue that it is important to consider their geographic expansion decisions in relation to the firm-level spatial dispersion of country networks and the size of that network. Using Tobit models to analyse panel data that capture the expansion patterns of 217 large retailers from 26 countries over a seven year period, this study reveals that such firms add higher levels of geographic distance when they have experience in dealing with large networks and greater degrees of dispersion, but limit the distance added when both of these network characteristics need to be combined. The important finding that spatial network dispersion has divergent effects on added geographic distance, dependent on whether it is considered in isolation or together with network size, sheds interesting new light on firms’ international expansion decisions, and informs IB scholars as well as economic geographers.