Foreign Competition and Firm Boundary Dynamics

How do firms react in the face of increasing or decreasing foreign competition? How does the type of foreign competition (FDI or imports) influence a firm's reactions? How do reactions such as changes of product scope differ from changes of geographical scope? Can we observe similarities and differences when looking at firms from different countries, i. e. Germany and the US? With increasing globalization these questions have become so central in the field of International Corporate Strategy. Our knowledge regarding those questions is still very limited. Answers to them are of highest interest to top managers and researchers as weil. However, strategy literature has revealed only very few results that ground on large-scale empirical analyses and, more importantly, are longitudinal in nature. Longitudinal analyses, however, are necessary to address the questions mentioned above. The dissertation by Florian Grone analyzes the impact of foreign competition change as one major antecedent of firm scope change. Increasing foreign competition is seen as a threat by incumbent firms. So far, competitive strategy reactions such as pricingand volume reactions have been researched intensively. Firms, however, da also decide on the continuous restructuring of their entire portfolio. Incumbent firms may increase or decrease their product scope, increase or decrease their vertical scope, and they may as weil increase or decrease their geographical scope at the same time. Their business portfolio reactions will depend upon their interpretation of how committed the attacks of foreign firms are.