2008 Ghemawat SO OKUNDU

Reconceptualizing international strategy and organization
Author(s): Pankaj Ghemawat

Source: Strategic Organization, Vol. 6, No. 2 (May 2008), pp. 195-206
Published by: Sage Publications, Ltd.
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STRATEGIC ORGANIZATION Vol 6(2): 195-206
DOI: 10.1177/1476127008090010
3
Copyright ©2008 Sage Publications (Los Angeles, London, New Delhi and Singapore)
http://so.sagepub.com
SO! APBOX
EDITORIAL ESSAYS
Reconceptualizing international str

and organization
Pankaj Ghemawat
University of Navarra, Spain
Relatively little gets written about international strategy.1 Accordin

vey, 6 percent of the articles published in the top 20 academic
journals in 1996-2000 had specifically international content and
set, 6 percent focused on the strategies and policies of multination
The author of the survey concluded that: 'Other than strategic
entry mode strategies there is very little research on MNC strateg
2002). An attempt to update the study for the period 2002-6 leads
similar conclusions: just 5 percent of the articles published in the
nals had specifically international content. MNCs' strategies a
accounted for a little more of that subset than before (12 perc
tinued to trail research on international joint ventures and alliances
and on internationalization (14 percent) (or more specifically, meas
antecedents and consequences thereof) and was closely followed by
timing, motivation, location and consequences of foreign direct
and on knowledge transfer, with 11 percent apiece (Pisani, 2007). S
cations, while subjective, do suggest a dearth of research on issues
international strategy.
To some extent, this dearth may reflect the lack of data that wou
large-sample analysis of strategic hypotheses: the last major da
effort, Raymond Vernon's Multinational Enterprise Project at Har
School, was concluded 30 years ago.2 Remedying this constraint is
by the differences that arise at national borders, and that impede n
border economic activity but also the assembly of data to bette
cross-border issues, as discussed further in the concluding section
International strategy has also experienced some indirect pressu
surge of research on culture, starting in the 1980s and driven by
Hofstede (Ferreira et al., 2002). However, perhaps the most direct
placement have been those made by scholars broadly interested in
organization and management. Consider the most prominent book
Bardett and Ghoshal's Managing across Borders (1989), based on a s
MNCs in three industries/sectors:
I 9 5
96 STRATEGIC ORGANIZATION 6(2)
The disappointments and failures were not due primarily to

analysis, but to organizational deficiencies. Throughout ou
were continually impressed by the fact that most manag
panies recognized what they had to do to enhance their g
The challenge was how to develop the organizational capability
Ghoshal, 2002: 4)
In other words, international strategy is easy - even the lo

but international organization is not.
This essay takes issue with this extreme perspective: it
plenty of interesting thinking to be done about internatio
about what functions are performed by cross-border ente
lar, how they deal with the differences that arise at nation
this perspective also shifts the terms of the debate about h
more specific, this essay argues for enriching the fundam
horse of international management - the integration—res
by adding in more explicit consideration of arbitrage opp
this case, it is useful to begin with a brief review of how w
Historical review
The fundamental strategic choice traditionally emphasized in the literature

international strategy concerns the extent to which a company empha
global integration and standardization vs differentiation and responsiveness
national/local differences. Focus on this choice can be traced at least as far
as John Fayerweather's (1969) discussion of the tension between pressures f
unification within companies and the fragmentation influences of diffe
national environments. Prahalad and Doz (1987), among others, elabor
this tension into the widely cited global integration—national responsive
tradeoff.3 Ffowever, Prahalad and Doz resisted the idea of MNCs always plac
a primary emphasis on just one function or the other: they also stressed the
tence of contexts in which it was necessary to be multifocal, i.e. to manage b
dimensions well (enough): see Figure 1.
Despite entertaining the possibility of interior as well as corner solution
Prahalad and Doz continued to respect the basic integration—responsive
tradeoff. Not so Chris Bartlett and Sumantra Ghoshal (2002), who argued th
companies could transcend the tradeoff, or become transnationalIs, by tran
ring knowledge internationally as well as building local presence by resp
ing to national differences and cutting costs by centralizing global-scale operat
i.e. by performing three functions well rather than the (maximum of) two
posed by Prahalad and Doz. In addition to downgrading the integra
responsiveness tradeoff, Bartlett and Ghoshal s proposal significantly incre
GHEMAWAT: RECONCEPTUALIZING INTERNATIONAL STRATEGY 197
organizational complexity: while Prahalad and Doz (19

recommend matrix structures for multifocal businesses, n
could be specified for the transnational. Further elaboratio
tions such as Nitin Nohria and Ghoshal's (1997) differentiat
et al.'s (2001) metanational entail even more organiza
but maintain Bartlett and Ghoshal's central emphasis
knowledge transfer.
From a single-country or local strategy standpoint, what is
about this line of development is its emphasis on performing m
well instead of trying to beat the median competitor by pe
tion particularly well. It is as exactly as if Michael Porter were
context, to recommend that companies do a good enough
and differentiation instead of primarily emphasizing one a
competitive advantage (see note 3). The broader conceptual
egy perspective is that unless there is some degree of mutual e
integrating globally and responding locally, the two taken
more of a (short) list of standard requirements ('both are
an object of strategic choice. So while a focus on cases in
manage multiple functions well may enrich the discussion
managerial action, that discussion is fated to take place in a str
sees companies as facing no meaningful strategic choice abo
Second, even if one gives up on the global integration-lo
tradeoff as insufficiently sharp to be of distinctive strategic
add a third function for MNCs to perform, the frequent as
writings that international knowledge transfer is IT is never r
looks rather questionable. This is particularly clear when the e
and Ghoshal, falls on 'exploiting parent company knowled
through worldwide diffusion and adaptation (Bartlett and
Centrally held intangible resources that afford cross-borde
Trans
national
Multifocal
Global
International integration
Figure I The integration-responsiveness tradeoff
and are proxied for by R&D and advertising intensity h

be the major propulsive forces for global integration in
zontal ones, as discussed in the next section). So overlay
to-subsidiary (or affiliate) transfers of knowledge or oth
increasing returns on top of the global integration-loca
could be seen as mostly double counting. Other kinds of
as contributions by subsidiaries with varied roles and res
onments — do seem more clearly distinguishable from
resource subject to increasing returns. However, thei
order issue within knowledge transfer by, for example,
raises questions about casting them as a third functi
local responsiveness and global integration. Fortunat
broader way of framing a third function for MNCs.
AAA strategies for dealing with differences
One reason that diverse contributions by subsidiaries ar

the diffusion and adaptation of a central stock of know
mer case, the differences between countries can be a sou
straint on value creation, i.e. arbitrage is possible. W
knowledge arbitrage is far from the only type of arbitr
• Labour arbitrage is prominent, for instance, in two

studied by Bartlett and Ghoshal. Consumer electronic
shift of production to countries with low labour costs
now amount to more than 60 percent of the total US
com equipment is more limited but China and Mex
ing sources of imports into the US - in what mo
high-tech industry.4
• Capital arbitrage can apply to real or financial capi
ital, one survey indicates that plant and infrastructu
cent less in low labour cost countries (Gardiner an
terms of financial capital, more than 1000 non-US co
US equity markets by issuing American Depositary
account for a quarter of all investments in foreign e
(Bank of New York, 2005).
• Tax arbitrage has long been common and has been
influence on firms' investment and financing decisio
And its incidence may be increasing: a survey of 1
cated that 62 percent were planning to move assets or
regimes, partly because of crackdowns on tax planning
(KPMG, 2006).
Of course, the proposition that arbitrage is potentially
international strategy is not new: Bruce Kogut advanced
(Kogut, 1985a, 1985b). The point of pushing it here is thr

trage still does not seem, overall, to be very plugged into 'm
national strategy.
Second, while Kogut's own interest in arbitrage evolved
dynamic flexibility in dealing with international fluctuation
and other cost determinants, the examples just listed suggest
much broader: that there are also sustained, significant diffe
ders — not just fluctuations - that allow for arbitrage strateg
viability. That last observation is amplified by noting that the
ences provided above was meant to be illustrative rather t
can specify many additional forms of economic arbitrage (e.g
of international variation in the availability of specialized input
to-pay) and administrative arbitrage (e.g. exploiting differen
tal laws or membership in different regional trading agre
instances of cultural arbitrage (e.g. country-of-origin effects
prestige in beauty and fashion) and geographic arbitrag
national flower and fresh fruit businesses, enabled by the
air transportation).
Third, there is the arbitrage opportunity still presented by
erature on MNCs, which has long distinguished between
which perform (many of) the same activities in different coun
MNCs, which arbitrage differences across countries by geogr
ing activities (often by vertical stage). This literature establis
zontal vs vertical distinction has empirical traction, particula
how cross-border activities are coordinated, suggesting th
of arbitrage as a cross-border function differ greatly from tho
tions traditionally emphasized by the (horizontal) focus o
responsiveness tradeoff: adapting to differences to achieve lo
or aggregating so as to overcome differences and achieve
economies.5 And so it supplies a systematic rationale for expl
arbitrage function (or the vertical dimension) - but conceived b
just in terms of knowledge arbitrage — to how we think
national strategy, as in Figure 2.
While some level of awareness of and attention to each of
adaptation, aggregation and arbitrage - is generally necessary
competition, their strategic implications extend well beyond
that all three have to be kept in view. To see that, it is usefu
differences between the imperatives of arbitrage as a cross-bo
those of adaptation and aggregation, which are traditionally
erature on horizontal MNCs. Table 1 supplies one depiction
but extended beyond the economic literature on the MNC ent
This three-dimensional representation aims to provide a rich
perspective on the tensions that international strategy must
two-dimensional integration-responsiveness tradeoff. An imm
Adaptation-* Local Aggregation-* Scale

responsiveness ar,d scope economies
\ Adjusting to Overcoming /
\ differences differences /
\ Exploiting /
\ differences /
Arbitrage-* Absolute
economies of specialization
Figure 2 The AAA strategy triangle
in my experience, to that modest statement of intent, is that existing work on

the integration—responsiveness tradeoff does shed some light on the third func
tion in the figure, arbitrage. While some of the existing work does mention the
possibility of arbitrage, particularly labour arbitrage, my own sense is that such
references are often ritualistic. Bartlett and Ghoshal s summary characterization
of global integration as 'building cost advantages through centralized global
scale operations' evokes only the logic of aggregation in pursuit of the inter
national economies of scale, not arbitrage in pursuit of absolute economies
through international specialization. And while they refer to arbitrage elsewhere
in their book, these mentions are confined to two footnotes. Anil Gupta and
Vijay Govindarajan (2001) do open the door for broader consideration of arbi
trage possibilities with their explicit discussion of activity architectures — but
their definition of such architectures, in terms of the number and identities of
the locations in which each activity is performed, as well as the specific charters
of each location, mixes arbitrage with adaptation and aggregation, in my termin
ology. The broader point seems to be that irrespective of the amount of credit to
be allocated to earlier citations of arbitrage possibilities, arbitrage deserves much
more attention than it has generally attracted because of its distinctive charac
teristics as a cross-border function, as well as the economic leverage that it
affords.
Another way of putting this is that while discussions of international strat

egy often focus on the similarities across countries, differences supply a more
promising point of departure. One reason is that a focus on (residual) differ
ences suggests a richer set of international strategies than does a focus on simi
larities. A second, even more fundamental reason relates to the Coasian
question of why there is administrative coordination within and across firms as
opposed to market coordination via the price mechanism.7 In the international
strategy context, focusing on such fundamental differences gives one a place to
stand in addressing this question in a way that focusing on similarities would
GHEMAWAT: RECONCEPTUALIZING INTERNATIONAL STRATEGY 20 1
Table I Comparing adaptation, aggregation and arbitrage
Adaptation Aggregation Arbitrage
Competitive
advantage:
Why globalize at all? To achieve local To achieve scale and To achieve
relevance through scope economies absolute (non-scalar)

national focus through international economies through
(while exploiting standardization international
some scale) specialization
Configuration: To limit the effects of cultural/administrative/ To exploit

Where to locate geographic/economic differences by (selected)
overseas? concentrating on foreign countries that differences by
are similar to home operating in more
diverse countries
Coordination: By country; By business; emphasis

By function;
How should emphasis on on horizontal emphasis on vertical
international adjustments to relationships to relationships,
operations achieve a local achieve economies including across
be organized? face within of scale across organizational
borders borders boundaries
Checks: Excessive variety Excessive Narrowing spreads

What to watch out or complexity standardization
for strategically?
Corporate Potentially discreet Appearances of and The exploitation or

diplomacy: and robust given backlash against displacement of
Which public emphasis on homogenization or suppliers, channels
issues need to be cultivation of a hegemonism or intermediaries;
addressed? local face (especially on part potentially most
of US companies) prone to political
disruption
not: markets often do not work well across borders, and the key organizational
question, discussed in the following, then becomes understanding what advan
tages firms or other organizational forms have at cross-border coordination versus
that baseline.
Implications for research
The reconceptualization of international strategy proposed in this essay has funda

mental implications not just for strategy research on what cross-border functions
international firms choose to emphasize but also for organizational research on
how they choose to pursue them. This dichotomy, while an oversimplification,
is a useful basis for discussing the recent allocation of research efforts within
international management. The specific points discussed in this section were
selected because they flow directly from the reconceptu

strategy proposed in this essay: they do not purport to
It is useful to begin by noting that research on intern
lines proposed here - and others - is subject to signi
There are intrinsic difficulties here, associated with ag
units up to the country level, ensuring cross-country c
one has done so, of being left with what a sceptic might
200 data points. Even so, it seems better to embrace he
research designs to it than to avoid it by focusing on o
point, in terms of the characterization above). Or to be
cisely because of the limitations of existing off-the-shel
collection and creative research design have the potentia
in the international arena.
In terms of research on international strategy, we n

arbitrage that treats it as potentially more central to cr
than implied by the out-of-sight/out-of-mind offshorin
The literature on the vertical MNC is of some help
developed relative to the literature on horizontal MNCs
age: for example, much has been written about the
holdup threat that is salient in some extractive industrie
arbitrage — but much less about many other forms of a
that seem more broadly important. The literature
(vs alternatives) in a single-country context also supplies
that appear not to have been fully ingested by the inte
ture. In addition, more emphasis on arbitrage might sp
other lines of international research, e.g. one might wa
in work on international alliances and joint ventures on
such as offshoring by outsourcing.
More broadly, at least some research on internationa
on the areas in which it has room to add to what we al
country strategy. Insight into the relationship between
relationship between multi-business strategy and single
single-business strategy effectively assumes that firm a
abilities are totally specific to a particular business, ther
multi-business (corporate) strategy to shed light on the
of variations in their business specificity. Analogously, s
egy assumes that activities and so forth are confined t
national strategy has an opportunity to shed distin
specificity and its cross-locational implications. In this r
simply emphasizes the differences between countries or
nomic interactions are localized nor work that ignores th
between countries is sufficient: we also need work that
interactions and interactions at a distance - and ideally
ated way than the dichotomy between same location an
Of course, one's level of excitement about such a resea

depends to some degree on the prospects for finding pattern
locations as opposed to idiosyncratic variation from location
hopeful in this regard, for reasons that are best illustrated w
There is considerable discussion today of whether fundament
MNCs are emerging out of China, India, etc. - countries very
the advanced economies in which most established MNCs are based. But
within China, MNCs tend to dominate in advertising and R&D-intensive sec
tors where aggregation is important, but face ongoing challenges of achieving
deeper adaptation (if they focus on China as a market) or of arbitraging more
effectively (if they treat it primarily as an export platform) (Ghemawat and
Hout, forthcoming). The few Chinese companies that have managed to build
up significant positions overseas typically rely on arbitrage or (less frequently)
adaptation to environments with some similarities to China's (e.g. along
'South—South' lines, as in Africa) — but continue to face the challenges of
upgrading and aggregating across borders. Or more broadly, what stand out
from this example are not fundamentally new ways of becoming multinational
but conditioning by the country of origin and its stage of development that
affects the strategy options selected from the same basic AAA menu.
Organizationally, the most obvious focus area, based on the discussion in
this essay, is further work on vertical coordination arrangements and the extent
to which they can be effectively embedded within the same organization as
(or dovetailed across organizational interfaces with) horizontal coordination
arrangements. This could be broadened to include all the coordination arrange
ments, many yet to be sanctified by serious study, being tried out by leading
edge companies. Consider a few I encountered while writing for managers
about the AAA triangle:
• Central to IBM's attempts to arbitrage as well as aggregate is a sophisticated

matching algorithm that optimizes people's assignments across all of its
locations - a 'human supply chain that is vastly more complicated than a
conventional parts supply chain.
• Procter & Gamble coordinates market development organizations and
global business units with an array of mechanisms, capped by layered
reviews that start with growth objectives and cascade through strategies,
innovations and brands before being translated into plans and budgets.
• General Electrics attempts to move production quickly to low-cost coun
tries have been aided by mechanisms such as 'pitcher-catcher': a 'pitching
team' at the existing site working closely with a 'catching team' at the new
site until the latter's performance meets or exceeds the former's.
• Cisco recently announced the appointment of a Chief Globalization
Officer based in Bangalore, which has been designated 'Cisco Globalization
Center East' — a global, developing-technology hub meant to encompass all
functions and house 20 percent of top management by 2010.
While new cross-border coordination mechanisms are cl

is far from clear that a new organizational form is being
of the preceding argument about the applicability of th
one presumes, associated organizational requiremen
MNCs). It seems more useful to note that considerati
firm (and inter-firm) coordination mechanisms is co
than a diversion from the fundamental Coasian question
contexts in which coordination by firms is favoured ov
One must be specific about possible intra-firm (and i
mechanisms — and their limitations — to get to a comp
interesting than the assumption that while cross-border
kets is subject to problems, cross-border coordination wi
Having discussed the allocation of attention to intern
strategy and organization, it is useful to conclude by
them. Since research on international organization must
a minimal body of work or knowledge about strategy is a
statements about international organization, the qu
Ghoshal in the introductory section of this essay notwi
extent that the existing allotment of attention to strateg
tion is based on an overly narrow view of strategy cont
optimum will probably involve paying proportionately m
In other words, strategy seems likely to be the 'strateg
medium run, in the sense in which John Commo
Barnard (1938) originally used that term. That contentio
further debate as well as conclude this essay.
Acknowledgements
I have benefited from comments on earlier drafts of this essay fro

and, in particular, Bernard Yeung, and from helpful research assis
was supported by the Division of Research at IESE Business Schoo
Notes
I have written elsewhere (e.g. Ghemawat, 2007a) about global rather than interna
strategy. I use the two terms interchangeably because I think of global strategy as e
passing a broad range of strategies for competing across borders rather than being re
for the one type of strategy emphasized by Ted Levitt, among others: a standardized
size-fits-all approach (see Levitt, 1983).
Werners (2002) survey is suggestive in this regard: it indicates that the research on M
strategies that has been undertaken has tended not to emphasize large-sample analysis
dominant methodology more broadly within international management research.
Other authors used different terminology for similar ideas. Thus, in his edited vo
Michael Porter (1986) distinguished between the somewhat parallel categories of globa
multidomestic strategies (or, as he would emphasize, industries).
GHEMAWAT: RECONCEPTUALIZING INTERNATIONAL STRATEGY 20S
4 Source: US Bureau of the Census.

5 For an articulation of the difference between horizontal and vertical MNCs, see Caves
(2007). Also note that the organizational basis for presuming some degree of the mutual
exclusivity seems better established for the strategic typology in Table 1 than for many
others (e.g. costs vs differentiation in the local strategy literature).
6 The table is drawn from and discussed at greater length in a practitioner-oriented article
(Ghemawat, 2007b).
7 I am grateful to Bernard Yeung for emphasizing to me the importance of the fundamental
Coasian question in this context.
8 For further discussion, see Ghemawat (2001, 2003) and the introduction to Arino et al.
(2004).
References
Arino, A., Ghemawat, P. and Ricart, J. E. (eds) (2004) Creating Value through International
Strategy. London: Palgrave Macmillan.
Bank of New York (2005) Annual DR Market Review', December.
Bartlett, C. A. and Ghoshal, S. (1989) Managing across Borders: The Transnational Solution.
Cambridge, MA: Harvard Business School Press.
Bartlett, C. A. and Ghoshal, S. (2002) Managing across Borders: The Transnational Solution, 2nd
edn. Cambridge, MA: Harvard Business School Press.
Caves, R. E. (2007) The Multinational Enterprise and Economic Analysis, 3rd edn. Cambridge:
Cambridge University Press.
Desai, M. A., Fritz Foley, C. and Hines, J. R. Jr (2006) 'Taxation and Multinational Activity:
New Evidence, New Interpretations', Survey of Current Business February.
Doz, Y. L., Santos, J. and Williamson, E (2001) From Global to Metanational: How Companies
Win in the Knowledge Economy. Boston, MA: Harvard Business School Press.
Fayerweather, J. (1969) International Business Management: A Conceptual Framework. New York:
McGraw-Hill.
Ferreira, M., Li, D. and Guisinger, S. (2002) 'Thirty Years of International Business Environment
Research in International Business Studies', paper presented at the Academy of
Management.
Gardiner and Theobald (2003) 'International Construction Cost Survey', December.
Ghemawat, E (2001) 'Distance Still Matters: The Hard Reality of Global Expansion', Harvard
Business Review September: 137—47
Ghemawat, P. (2003) 'Semiglobalization and International Business Strategy', Journal of
International Business Studies 34(2): 138-52.
Ghemawat, E (2007a) Redefining Global Strategy. Boston, MA: Harvard Business School Press.
Ghemawat, P. (2007b) 'Managing Differences: The Central Challenge in Global Strategy',
Harvard Business Review March: 58-68.
Ghemawat, E and Hout, T. (forthcoming) 'The Next Multinationals? China, India, and Beyond',
Harvard Business Review
Gupta, A. K. and Govindarajan, V. (2001) 'Converting Global Presence into Global Competitive
Advantage', Academy of Management Executive 15(2): 45-56.
Kogut, B. (1985a) 'Designing Global Strategies: Comparative and Competitive Value-Added
Chains', Sloan Management Review 26(4): 15-28.
Kogut, B. (1985b) 'Designing Global Strategies: Profiting from Operational Flexibility', Sloan
Management Review 27(1): 27-38.
KPMG (2006) 'World News Digest', Financial Times 19 May: 6.
Levitt, T. (1983) 'The Globalization of Markets', Harvard Business Review 61(3): 92-102.
Nohria, N. and Ghoshal, S. (1997) The Differentiated Network: Organizing Multinational
Corporations for Value Creation. San Francisco: Jossey-Bass.
Pisani, N. (2007) 'International Management Research: An Upd

School, unpublished draft, June.
Porter, M. (ed.) (1986) Competition in Global Industries. Boston,
Press.
Prahalad, C. K. and Doz, Y. L. (1987) The Multinational Mission: Balancing Local Demands and
Global Vision. New York: Free Press.
Werner, S. (2002) 'Recent Developments in International Management Research: A Review of
20 Top Management Journals', Journal of Management 28(3): 277-305.
Pankaj Ghemawat is the Anselmo Rubiralta Professor of Global Strategy at IESE

and theTiampo Professor of Business Administration (on leave) at Harvard Business School.
His most recent book is Redefining Global Strategy (Harvard Business School Press, 2007).
Other recent globalization-related publications include 'Regional Strategies for Global
Leadership', which won the McKinsey Award for the best article published in the Harvard
Business Review in 2005;'Global Integration A Global Concentration' (with Fariborz Ghadar),
the lead article in August 2006 in Industrial and Corporate Change', 'Managing Differences:The
Central Challenge in Global Strategy', the lead article in March 2007 in the Harvard Business
Review; and 'Why the World Isn't Flat' in Foreign Policy March/April 2007. Ghemawat's other
books include Commitment, Games Businesses Play and Strategy and the Business Landscape. He
also serves as editor for business strategy at Management Science. In 1996, he was elected a
fellow of the Academy of International Business, and in 2008, he has been selected as the
recipient of the Fundacion BBVA-IESE prize for bridging between research and practice and
the Irwin Outstanding Educator Award conferred by the Business Policy and Strategy
division of the Academy of Management. Address: IESE Business School, University of Navarra,
Av. Pearson, 26,08034 Barcelona, Spain, [email: pghemawat@iese.edu]

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Reconceptualizing international strategy and organization

Author(s): Pankaj Ghemawat

Reconceptualizing international str

Relatively little gets written about international strategy.1 Accordin

The disappointments and failures were not due primarily to

In other words, international strategy is easy - even the lo

The fundamental strategic choice traditionally emphasized in the literature

organizational complexity: while Prahalad and Doz (19

Figure I The integration-responsiveness tradeoff

and are proxied for by R&D and advertising intensity h

AAA strategies for dealing with differences

One reason that diverse contributions by subsidiaries ar

• Labour arbitrage is prominent, for instance, in two

(Kogut, 1985a, 1985b). The point of pushing it here is thr

Adaptation-* Local Aggregation-* Scale

Figure 2 The AAA strategy triangle

in my experience, to that modest statement of intent, is that existing work on

Another way of putting this is that while discussions of international strat

Table I Comparing adaptation, aggregation and arbitrage

Adaptation Aggregation Arbitrage

relevance through scope economies absolute (non-scalar)

some scale) specialization

Configuration: To limit the effects of cultural/administrative/ To exploit

Coordination: By country; By business; emphasis

Checks: Excessive variety Excessive Narrowing spreads

Corporate Potentially discreet Appearances of and The exploitation or

Implications for research

The reconceptualization of international strategy proposed in this essay has funda

selected because they flow directly from the reconceptu

In terms of research on international strategy, we n

Of course, one's level of excitement about such a resea

• Central to IBM's attempts to arbitrage as well as aggregate is a sophisticated

While new cross-border coordination mechanisms are cl

I have benefited from comments on earlier drafts of this essay fro

4 Source: US Bureau of the Census.

Pisani, N. (2007) 'International Management Research: An Upd

Pankaj Ghemawat is the Anselmo Rubiralta Professor of Global Strategy at IESE

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