The Value Creation Perspective of International Strategic Management

This paper applies the concept of value creation to examine the strategic management of multinational enterprises. “International strategic management” is first defined as the process through which value is created by managers operating across a national border. The domain of international strategic management is thus determined by activities that distinguish international management from domestic management in the process of value creation. This perspective on value creation is used to answer three questions pertaining to international strategic management. First, how important is international strategic management? Simple statistics presented here demonstrate that the international component of value creation is important in the U.S. economy. Second, what is the domain of international strategic management? The paper presents a framework in which international strategic management is the aggregation of value created through international production, marketing, and financial activities, and reveals that the domain of international management is vast. Third, does international strategic management make the whole multinational enterprise worth more than the sum of its parts? Empirical evidence suggests that the answer is yes, at least for U.S. multinationals in the early 1990s.