Geographic Scope Under Conditions Of Confined And Connected Change: The Case Of Telefónica (Spain). ACES Working Papers, 2012

Traditional explanations of MNE geographic scope formation fit somewhat uncomfortably with recent empirical and theoretical work in IB that suggests (1) that wholesale (not just gradual) changes in MNE geographic scope may be more frequent than previously thought, and (2) that managers’ responses to a world increasingly characterized by random, unpredictable change are more experimental and less optimizing in nature than assumed in most models of international expansion. In this paper we draw from studies portraying industries as dynamic networks, and from the literature on managerial cognition to provide a complementary explanation of the evolution of MNE geographic scope that reconciles the insights of traditional IB models with the questions raised by more recent studies in this field. We illustrate the proposed model through a detailed account of the internationalization process of Telefonica, the Spanish telecommunications company.