Contents lists available at ScienceDirect International Business Review journal homepage: www.elsevier.com/locate/ibusrev Why does MNE performance vary across countries? An inquiry into the competitive value of MNE assets Marina Carnevale a, ⁎ , Lilac Nachum b , Helaine Korn b a Fordham University, 140 West 62nd Street, Suite 433, New York, NY 10023, USA b Baruch College, City University New York, 55 Lexington Avenue, New York, NY 10010, USA ARTICLE INFO Keywords: MNE competitive advantage theory Legal services MNE assets Competition theory ABSTRACT Variations in MNEs’ competitive positions across countries are a prevalent phenomenon in the business landscape, but are not fully explained by MNE theory. Building on competition theories and applying them to the context of MNEs, we hypothesize that the value of MNEs’ assets varies in relation to competitors of different nationalities and geographic scope, as well as across locations. These predictions are tested on US legal-services MNEs in competition with US domestic firms and non-US MNEs in the US and abroad. We find support for the hypothesized variations, particularly with reference to competitors’ location and nationality. These variations suggest that the value of MNE assets is relative, and that their varying market positions across countries are an inherent feature of international competition, calling for corresponding positioning and strategies. 1. Introduction The business landscape is scattered with examples of MNEs devel- oping prevailing advantages in a certain country by exploiting their assets and building on them to establish a strong competitive position, whereas these same assets are of a far less potent competitive advantage in other countries, leaving the MNEs’ position short of their success elsewhere. For instance, Latham & Watkins, the world’s largest law firm by gross revenues, is ranked as first tier in the US, but only part of the fourth tier in Japan. Similarly, White & Case, the number one interna- tional law firm in the United Kingdom, is not even among the top eight in the United States. Such examples are apparent across other industries as well. Google is the leader in web search in Western Europe but so far has failed to establish significant positions in Russia, China, and South Korea. Starbucks is opening stores in China at the tempo of one a day, but has failed to establish significant presence in Europe, and is failing in Australia. What do these differences tell about the competitive value of MNEs’ assets and the ways by which they should be deployed across countries? Why does the value of the same asset vary in different countries? Assuming that assets’ value is determined by the possession of internal capabilities and, excluding the importance of exogenous forces, MNE theory offers limited means to address these questions (Caves, 1996; Contractor, 2012; Hennart, 2009; Hymer, 1960). Discussions of the internalization of the cross-border market for knowledge (Buckley & Casson, 1976, 2009), and the theory of monopolistic advantages (Lall, 1980; Rugman & Verbeke, 2003) imply that the value of MNE assets lies in their distinctiveness, but fall short of articulating the benchmark against which this distinctiveness is determined and evaluated. Other theoretical strands regard exogenous forces, such as the competition, as a major force that influences a focal MNE’s strategic moves, notably the decision to invest abroad and location choices, although they do not consider these forces as a determinant of assets’ value (Alcacer, Dezso, & Zhao, 2015; Ghemawat & Thomas, 2008; Gimeno, Hoskisson, Beal, & Wan, 2005; Head, Mayer, & Ries, 2002; Knickerbocker, 1973). Dunning’s OLI eclectic paradigm (1977) suggests that foreign investments undertaken by MNEs are influenced by the competitive advantage brought by ownership of specific assets (O), by the locational attractiveness of different countries (L), and by potential internationalization advantages (I), thus implying a contextual aspect of MNE’s competitiveness but not explicitly assessing how the value of MNEs’ assets varies depending on exogenous forces, including the characteristics of the competitors. Understanding the forces that shape competitive value is, however, a precondition for comprehending the variations in MNEs’ competitive positions across countries and responding to them effectively. In this study we focus on one aspect of the myriad of external forces that determine this outcome, namely the competition. To deepen the understanding of the impact of the competition, we develop and test a theoretical framework that is based on two assumptions drawn from strategic management theories applied to the context of the MNE. For http://dx.doi.org/10.1016/j.ibusrev.2017.05.004 Received 8 June 2016; Received in revised form 17 April 2017; Accepted 3 May 2017 ⁎ Corresponding author. E-mail addresses: mcarnevale3@fordham.edu (M. Carnevale), Lilac.Nachum@baruch.cuny.edu (L. Nachum), Helaine.Korn@baruch.cuny.edu (H. Korn). International Business Review xxx (xxxx) xxx–xxx 0969-5931/ © 2017 Elsevier Ltd. All rights reserved. Please cite this article as: Carnevale, M., International Business Review (2017), http://dx.doi.org/10.1016/j.ibusrev.2017.05.004