New evidence and evolution on the regional and global competitiveness of multinational enterprises

International competitiveness is fundamentally shaped by the interaction between firm-specific advantages (FSAs) and country-specific advantages (CSAs), which is a central insight of Rugman’s (1981) internalization theory and a foundation of the international business and strategy literature (Rugman and Verbeke, 2004). FSAs refer to the proprietary assets, capabilities and organizational skills that multinational enterprises (MNEs) deploy across borders, whereas CSAs capture the locational advantages arising from national or regional environments, including factor conditions, industry structure and institutional quality (Porter, 1990). Together, these dimensions shape the extent to which firms compete domestically, regionally or globally, and how they configure subsidiary activities across regions (Lee, 2019). They reflect the broader observation that competitiveness emerges from the interplay of multiple spatial levels rather than solely from national attributes (Aiginger and Vogel, 2015).

Building on this perspective, Rugman et al. (2012) provided comprehensive empirical examinations of international competitiveness by analyzing the Fortune Global 500. Their study demonstrated that the world’s largest MNEs were predominantly regional, not global, with most sales and assets concentrated in their home triad region (North America, Europe and Asia-Pacific). They formalized a modified FSA/CSA matrix linked to Porter’s diamond and the double-diamond logic (Moon et al., 1998; Rugman and D’Cruz, 1993), showing that most firms rely on home-region CSAs to build and deploy their FSAs, while only a minority operate across multiple regions with truly global advantages. This aligns with recent research demonstrating that competitiveness in the contemporary economy increasingly depends on how firms integrate local, regional and global sources of knowledge and resources (Cantwell and Zaman, 2018; Buckley, 2017).

Since the publication of their seminal paper (Rugman et al., 2012), however, the global competitive environment has changed dramatically. The post-2008 decade was marked by a shifting geopolitical and economic landscape shaped by the slow recovery from the global financial crisis, the rise of protectionist pressures and intensifying US–China economic frictions. During this period, China advanced its regional and global economic ambitions through policies that more tightly integrated Hong Kong and Macau into national development plans and framed Taiwan as part of a broader cross-strait economic engagement strategy. Initiatives such as the early phases of the Belt and Road Vision, expansions of free-trade zones and efforts to elevate the international role of the renminbi further reshaped the regional competitive environment.

These developments contributed to early forms of global value chain (GVC) restructuring, as firms responded to shifting costs, regulatory changes and strategic uncertainty by exploring diversification, regional consolidation and selective reshoring, which is consistent with emerging evidence on value-chain reconfiguration and its implications for competitiveness (Burlina and Di Maria, 2020; Gelei and Sass, 2021). These shifts are also mirrored in the growing strategic role of global cities as hubs connecting regional operations with worldwide networks (Asmussen et al., 2018). The changing composition of the Fortune Global 500, where many Western firms have been replaced by Chinese firms, underscores the broader rebalancing of the global corporate landscape and highlights the need for a systematic reassessment of how international competitiveness is configured today.

These developments underscore the need for a systematic reassessment: Have the competitiveness of large MNEs remained predominantly regional, expanded toward greater global reach, reverted toward more domestic concentration or evolved into new hybrid patterns that blend regional and global elements?

To address this question, we update and extend Rugman et al. (2012) by replicating their original methodology on the 1999 and 2008 Fortune Global 500 firms and adding a new wave of data for 2017, covering the critical decade following the global financial crisis (Rosa et al., 2020). We operationalize FSAs through geographic distributions of sales and assets capturing downstream market reach and upstream asset allocation (Rugman et al., 2009; Rugman et al., 2012; Verbeke et al., 2025a, 2025b). We reconstruct CSAs using the World Economic Forum’s Global Competitiveness indicators and use a two-stage principal component analysis (PCA) to derive national, home-region and global competitiveness scores. This approach allows a consistent comparison across three benchmark years (1999, 2008 and 2017) and reveals how both FSAs and CSAs have evolved across countries and regions.

Our findings show that the core regionalization result persists, as reflected in the consistently high average home-region-to-total (R/T) share, indicating that a large portion of a firm’s sales or assets remain concentrated in its home region relative to its total worldwide operations (Rosa et al., 2020; Rugman and Verbeke, 2004). However, the pattern has rebalanced rather than reversed. North American and European firms modestly reduce home-region concentration and expand foreign exposure, whereas Asia-Pacific firms, especially from China, become more regionally concentrated even as they tap global CSAs (technology, finance and knowledge) to serve home and regional markets. We also find substantial heterogeneity where some economies sustain or strengthen national competitiveness (e.g. the USA, Switzerland, the Netherlands, Japan, Taiwan and Singapore), while others exhibit relative decline (e.g. Canada, Austria, France, Spain, Australia and South Korea). Finally, our results indicate the emergence of a hybrid regional–global pattern, rather than a dominance of purely global or purely domestic models. By “hybrid,” we refer to firms that anchor their operations and competitive deployment within their home or regional markets (as seen in their R/T distributions) while simultaneously sourcing critical technologies, knowledge, capital or intermediate inputs from outside their home region (as reflected in their CSA profiles). In short, firms compete regionally but learn and upgrade globally. This pattern extends the traditional regionalization thesis by showing that MNEs increasingly combine regional deployment with global capability acquisition which can be seen as a strategic response to rising fragmentation, differentiated market access and the need to balance efficiency with resilience (Aiginger and Vogel, 2015; Verbeke et al., 2025a, 2025b).

This paper makes three contributions to research on international competitiveness and MNE strategy. First, it provides the longest and most consistent empirical update to the FSA–CSA evidence base by extending Rugman et al.’s (2012) analysis of the Fortune Global 500 from 1999 to 2017, thereby incorporating nearly two decades of structural change in the world economy. Second, it offers a comparative assessment of how international competitiveness has evolved under conditions of multipolar globalization and geopolitical fragmentation, documenting both continued regionalization and important cross-regional rebalancing. Third, it develops policy- and strategy-relevant insights into how firms and countries reconfigure FSAs and CSAs, including the emergence of hybrid regional–global patterns that combine regional deployment with global capability sourcing. Together, these contributions refine understanding of the foundations of international competitiveness and establish a platform for evaluating future shifts in the geography of MNE activity.

The conceptual foundations of our analysis rest on the modified FSA/CSA matrix introduced by Rugman et al. (2012). This framework integrates three core elements of international business theory. First, Rugman’s (1981) original FSA/CSA matrix highlights how FSAs and CSAs jointly shape the competitiveness and internationalization paths of MNEs. Second, Rugman and D’Cruz (1993) double-diamond model emphasize the importance of foreign or international diamond enhancing Porter’s (1990) single-diamond model (i.e. factor endowments, demand characteristics, related and supporting industries and rivalry). Third, together with regional MNE strategy (Rugman, 2005; Rugman and Verbeke, 2004), it shows that internationally competitive firms derive advantages from major trading partners and integrated regional blocs. This element underscores that competitiveness often emerges from a combination of domestic and regional CSAs.

In the modified FSA/CSA matrix, these theoretical streams converge by conceptualizing CSAs at three geographic levels (i.e. domestic, home-region and global) and by examining how firms deploy FSAs across these levels. Figure 1 illustrates how competitive advantages emerge from interactions among regional and global diamond conditions and from domestic environments. Together, these models provide a structured lens for interpreting how MNEs recombine firm-level capabilities with locational conditions across multiple geographic scales.

A substantial body of research argues that globalization remains partial and uneven, characterized by persistent cross-border frictions and strong regional patterns – a condition often described as regionalization or semi-globalization (Rugman, 2000; Rugman and Verbeke, 2004; Ghemawat, 2007). Rugman and Verbeke (2004) showed that most MNEs operate primarily within their home triad region due to the geographic boundedness of markets, regulatory environments and institutional structures. Rugman et al. (2012) offered strong empirical support for this view, demonstrating that the majority of Fortune Global 500 firms in 1999 and 2008 were home-region-oriented. Recent extensions of internalization theory reinforce this logic. Verbeke and Kano (2016) argued that cross-regional expansion imposes significant bounded rationality and bounded reliability costs, limiting the number of MNEs able to internalize operations globally. These constraints help explain why, even with rising global knowledge flows, most firms remain regionally anchored while selectively sourcing FSAs from global ecosystems.

The global competitive landscape has changed markedly since 2012. Scholars highlight the emergence of multipolar globalization, in which technological, institutional and geopolitical dynamics increasingly shape MNE strategy (Buckley, 2020; Witt, 2019). GVCs have been disrupted and partially reconfigured through China+1 strategies, friend-shoring and new regional production hubs (Strange and Humphrey, 2019). National competitiveness profiles have also shifted, with some economies strengthening technological and institutional capabilities while others experience erosion.

These developments are especially salient in Asia-Pacific, where the rapid rise of MNEs headquartered in China reflects deeper structural changes in the geography of corporate activity (Witt and Redding, 2013; Luo and Tung, 2007; Meyer, 2020). Research shows that many Asian firms adopt hybrid internationalization strategies, relying on globally sourced technological and financial inputs while concentrating sales and operations regionally (Rugman and Li, 2007; Rugman and Oh, 2008).

Taken together, these shifts raise important questions about whether MNEs continue to rely primarily on home-region CSAs, whether global CSAs have become more salient or whether firms are increasingly adopting hybrid regional–global configurations that earlier empirical studies may not have fully captured (Rosa et al., 2020). Reexamining the evolution of MNE competitiveness through the modified FSA/CSA framework is therefore essential. Such an analysis enables a clearer understanding of how FSAs and CSAs coevolve amid multipolar globalization, geopolitical fragmentation, and ongoing value-chain restructuring.

Because the purpose of this article is to reassess the international competitiveness of large MNEs rather than to advance measurement techniques for firm- and country-level competitiveness, we direct readers to Rugman et al. (2012) for a detailed discussion of the underlying data, measures and methodological procedures. In this section, we provide only a brief overview of these elements.

Rugman et al. (2012) used Fortune Global 500 data (1999, 2008) and firms’ geographic sales/assets to measure FSAs via foreign-to-total (F/T) and R/T ratios. CSAs are derived using two-stage PCA on World Economic Forum (WEF) competitiveness data based on Porter’s diamond and macro-institutional factors. Regional and global competitiveness are computed as GDP-weighted averages of country competitiveness scores. Following Rugman et al. (2012), our empirical analysis relies on the Fortune Global 500, which offers consistent financial and geographic breakdowns of the world’s largest firms. The Fortune list provides information on firms that account for a disproportionately large share of global economic activity, international trade and foreign direct investment (Rugman, 2005). We analyze three benchmark years (1999, 2008 and 2017) corresponding to the earlier two years (i.e. 1999 and 2008) examined in Rugman et al. (2012) and a new benchmark year (i.e. 2017), which together span nearly two decades of structural change in the global economy. The raw sample includes all firms listed in each year’s Fortune Global 500 ranking, but our analytical sample consists of those firms for which adequate geographic segment data are available.

Firm-level information, including sales and assets by geographic region, was hand-collected from annual reports, supplemented where necessary by Compustat Segment (Standard & Poor’s) and OSIRIS (Bureau van Dijk) to ensure coverage and consistency. This follows the original data collection procedure used in Rugman et al. (2012). Consistent with the WEF, mainland China and Taiwan are treated as distinct home economies. Firms headquartered outside the triad regions (“other regions”) are retained but analyzed separately where appropriate. Across the three benchmark years, the final sample ranges from 488 to 495 firms, depending on reporting completeness. We retain the original triad classification used by Rugman and Verbeke (2004), defining North America, Europe and Asia-Pacific as broad home regions for classifying sales and assets.

In addition, we derive country competitiveness and CSA scores based on Porter diamond factors using data from the WEF’s Global Competitiveness Reports (WEF GCR) for 1999, 2008 and 2017 (World Economic Forum, 1999, 2008, 2017). The WEF GCR data have been widely used in international business and marketing research (e.g. Goerzen and Beamish, 2003; Delmas and Toffel, 2008; Solleiro and Castañon, 2005), and provide a suitable basis for operationalizing national, regional and global competitiveness consistent with Porter’s diamond framework.

Following Rugman et al. (2012) and Rugman and Verbeke (2004), we operationalize FSAs using the geographic scope of downstream and upstream activities, as reflected in firm-level sales and asset distributions. From the geographic segment data, we calculate foreign-to-total (F/T) sales and assets as measures of the firm’s internationalization beyond the home country. To capture the regional nature of FSAs, we calculate home-region-to-total (R/T) sales and assets. These measures correspond to the geographic reach of downstream (sales/marketing) and upstream (assets/production) FSAs (Rugman et al., 2009).

Using these ratios, and consistent with classifications used in Rugman et al. (2012), firms’ geographic scope of FSAs can be grouped broadly as national (less than 10% of F/T sales), home-region (more than 60% of R/T sales and more than 10% of F/T sales) and global (less than 60% of R/T sales and more than 10% of F/T sales). While the exact cell assignments in the modified FSA/CSA matrix depend on both F/T and R/T scores (combined with CSA levels), these thresholds provide a useful heuristic for distinguishing national, regional and global scopes of FSA deployment.

To operationalize CSAs, we follow Rugman et al. (2012) and construct competitiveness indicators based on Porter’s diamond using the WEF GCR data for each firm’s home economy and relevant regions. CSAs are measured at three geographic levels: domestic CSA (competitiveness of the firm’s home country); home-region CSA (GDP-weighted average competitiveness of other countries in the firm’s home triad region); and global CSA (GDP-weighted average competitiveness of countries in the two foreign triad regions).

The domestic competitiveness scores are derived through a two-stage PCA. In the first stage, we categorize the first-order variables commonly available in the WEF GCR data into four microeconomic business environment factors (i.e. factor condition, demand condition, supporting industries and strategy, structure and rivalry) based on the Porter’s “diamond” model (Porter, 1990). In addition, we also include two exogenous macroeconomic factors (i.e. macroeconomic policies and social infrastructure and political institutions) suggested by Porter (1990) and Rugman and D’Cruz (1993). All variables are standardized, after which we conduct PCA on each of the six variable groups. For each diamond dimension, PCA produces a single first-order factor representing the subdimension of national competitiveness.  Appendix 1 shows the list of first-order variables included and their loadings, along with the extract factors and the reliability scores.

Next, we conduct a second-stage PCA using the six first-order diamond factors as inputs. Across all three years, the second-order PCA converges on a single overarching factor (national competitiveness) with an eigenvalue greater than 1. Although the loading for the macroeconomic policy factor is relatively low in some years, we retain all six subdimensions given that national competitiveness is a multidimensional formative construct (Jarvis et al., 2003) and excluding any component would distort the conceptual meaning of overall competitiveness. Reliability scores are high across years (Cronbach’s alpha > 0.90), underscoring the internal consistency of the composite measure. These second-order factors and their loadings in the focal factor (national competitiveness) are shown in  Appendix 2 for year 2017.

Our findings from the two-stage PCA indicate that the dominant drivers of national competitiveness vary across countries ( Appendix 2). Factor conditions are the major source of advantage for countries such as the USA, Canada, Finland, the Netherlands, Germany and Switzerland. Demand conditions play a central role for China, India, Taiwan and Ireland, while related and supporting industries underpin competitiveness in many European economies including Austria, Belgium, France, Germany, Italy, and Spain as well as in Japan and Turkey. Firm strategy, structure, and rivalry dimension contributes strongly to national advantage in Japan, Germany, Switzerland, Finland and the USA. For the macro-institutional dimensions, macroeconomic policy is an important contributor for Norway, The Netherlands, Singapore, the United Arab Emirates and Saudi Arabia, whereas social infrastructure and political institutions are especially significant for Denmark, Finland, Norway, Singapore, Luxembourg, the Netherlands, Japan and Switzerland. These results confirm that national competitiveness is multifaceted, with different countries drawing strength from different components of the diamond. Overall, considering the full set of diamond-related and macro-institutional factors, countries such as Switzerland, Germany, Finland, the Netherlands, Singapore, Sweden and the USA exhibit very strong national competitiveness, which constitutes an important source of location-specific advantages that MNEs can exploit within their home region as well as in foreign regions. The home region competitiveness is measured as the GDP-weighted average competitiveness of all other countries in the firm’s triad region (excluding the home country). Global competitiveness is measured as the GDP-weighted average competitiveness of all countries outside the home region. Because global competitiveness aggregates across all nonhome regions, firms headquartered in the same triad region share a common global CSA score for a given year.

These three standardized CSA scores for each firm serve as the source of location-specific advantage in the modified FSA/CSA matrix. They provide a consistent basis for linking each firm’s FSA deployment to its underlying locational advantages and thus form the foundation of our subsequent FSA–CSA classification.

We next classify firms by crossing the geographic scope of their FSAs (national, home-region and global) with the geographic source of their CSAs (domestic, home-region and global). The resulting 3 × 3 matrix yields nine possible configurations of international competitiveness, capturing how firms combine locational advantages at different levels with corresponding deployment of FSAs.

Because our measures and procedures replicate those of Rugman et al. (2012), the resulting matrices for 1999, 2008 and 2017 are directly comparable, enabling a consistent longitudinal assessment of how MNE competitiveness evolves across two decades of global economic change.

We first describe shifts in the regional composition of the Fortune Global 500 across the three benchmark years. As appears in Table 1, in 1999, the list consisted of 192 North American, 164 European and 139 Asia-Pacific firms, plus 5 firms from other regions. By 2008, Europe (186 firms) overtook North America (160 firms), while Asia-Pacific increased slightly to 145 firms. By 2017, the structural balance shifts markedly: Asia-Pacific surges to 201 firms, North America declines to 149, Europe drops to 138 and firms from other regions rise to 12.

This significant rebalancing is driven primarily by the rise of Chinese firms, whose presence grows from 10 firms in 1999 to 109 firms in 2017, even alongside a sharp reduction in Japanese firms (from 107 firms to 51 firms). Over the same period, the number of US firms falls from 178 firms to 136 firms. Taiwan also emerges as a notable performer (from 1 firm to 6 firms), particularly in technology and manufacturing. Among Western economies, the Netherlands and Switzerland stand out as two that maintain strong positions, underscoring the resilience in innovation, institutional quality and industrial capability.

Table 1 also reports the geographic distribution of sales for the Fortune Global 500 firms in 1999, 2008 and 2017. To ensure internal validity, we focus our discussion on countries with at least five firms in any given year. Substantial cross-country variation persists in foreign (F/T) sales and intra-regional (R/T) sales relative to total sales.

European firms remain the most internationalized, with average foreign sales rising from 57.4% (1999) to 64.7% (2017), despite a temporary dip in 2008 (45.5%). Their intraregional sales begin at 67.1% (1999), increase slightly in 2008 (73.6%) and then fall sharply to 56.5% (2017), indicating a shift toward more globally diversified sales. The 2008 global financial crisis prompted firms to scale back their global activities and concentrate more heavily on domestic and home-region markets (Rugman and Oh, 2011). Dutch (65.5%), Swedish (96.3%),and Swiss (82.5%) firms exhibit the highest foreign sales ratios, reflecting small domestic markets.

US firms show more modest internationalization, with foreign sales gradually increasing from 24.0% (1999) to 32.6% (2008) to 36.0% (2017). Intraregional sales steadily decline (from 80.9% in 1999 to 68.0% in 2017), reflecting incremental globalization while still being strongly anchored in the home region (68% intraregional sales). Due to their dependency on the US market, Canadian firms are more internationalized and at the same time regionalized.

Asia-Pacific firms remain the least internationalized overall, with foreign sales dropping from 26.9% in 1999 to 22.4% in 2017. In contrast, intraregional sales rose consistently from 77.4% in 1999 to 79.7% in 2008 to 82.6% in 2017, indicating deepening regional concentration. Japanese, Australian and South Korean MNEs show moderate foreign reach (26–36%), whereas mainland Chinese and Indian firms remain overwhelmingly domestic or home regional (5.8% and 19.9% foreign sales in 2017). China’s dramatic growth in the number of Global 500 firms (10 firms to109 firms) is not matched by commensurate global sales penetration, although Taiwan stands out with very high foreign sales (92.2% in 2017) likely due to the small home market size.

Likewise, in Table 2, we report on foreign assets and intraregional assets. The findings for assets are largely consistent with those for sales, but assets (upstream activities) are somewhat less internationalized than sales (downstream activity), consistent with Rugman et al.’s (2012) original results and findings from Swiss MNEs (Verbeke et al., 2025a, 2025b) and Asian MNEs (Rugman and Oh, 2008). Overall, the evidence reinforces the central regionalization thesis that even in 2017, large MNEs often earn the majority of sales and investment for their operations in their home region.

Table 3 reports the national, home-region and global competitiveness scores for countries that have Fortune Global 500 firms across 1999, 2008 and 2017. Several patterns parallel, but also significantly update, those reported in Rugman et al. (2012). While many countries exhibit modest declines in their national competitiveness scores between 1999 and 2017, reflecting lower relative performance in diamond conditions and institutional quality. Several notable country-level shifts stand out.

For national competitiveness, developed economies continue to exhibit the strongest national competitiveness score, with Switzerland, the Netherlands, Sweden, Finland, Germany, the USA, Japan, Singapore and Taiwan consistently at the top of the distribution in 2017. As shown in  Appendix 2, these countries derive their competitiveness from multiple diamond components, including advanced factor conditions (e.g. the USA, Finland and the Netherlands), strong supporting industries (e.g. Germany, Japan and Switzerland) and robust social and institutional infrastructures (e.g. Denmark, Norway and Singapore). The USA strengthens its overall position, supported by post-2008 economic recovery, robust demand conditions and institutional stability, alongside significant public and private investments in innovation clusters in technology, biotechnology and advanced services. The Netherlands and Switzerland benefit from strong factor conditions – education systems, R&D intensity and infrastructure – combined with macroeconomic stability and globally competitive firms. Japan improves through corporate governance reforms and sustains industrial and R&D investments under the Abenomics policy agenda.

At the same time, several advanced economies experience significant declines in national competitiveness. Canada shows deterioration in microeconomic conditions – driven by a weaker currency, falling oil and gas prices and increasingly stringent energy-sector regulation during the 2010s. Austria exhibits declines in demand conditions, firm strategy and rivalry and social infrastructure, reflecting weak domestic investment, stagnant Central and Eastern European markets and structural rigidities in education, labor markets and energy costs. France continues to feel the effects of the global financial crisis and Eurozone debt crisis, with persistent unemployment and underperformance of midsized firms relative to Germany’s Mittelstand. Spain’s competitiveness remains constrained by its slow recovery from the sovereign debt crisis. Australia faces weakening competitiveness due to high inflation, slow post-mining-boom growth and skill mismatches as the economy transitions away from resource dependence.

Asian countries also provide interesting observations. Taiwan strengthens competitiveness through innovation-driven policies, a dense and agile SME network and moderate wage growth with low inflation. Singapore and Malaysia also post gains, reflecting improvements in institutional quality, technological capability and factor upgrading. China exhibits marked improvement from 1999 to 2017 (rising from −0.56 to 0.26) driven by growing market scale, industrial upgrading and expanding technological capacity, even though institutional and macroeconomic dimensions remain uneven. In contrast, South Korea shows a notable decline, driven by rising labor costs, increasing competitive pressure from China and domestic political uncertainty, including the 2016–17 presidential impeachment, which heightened institutional instability.

Home-region competitiveness displays relatively stable patterns across triad regions. Europe continues to show the strongest and most balanced home-region CSA base, supported by a cluster of highly competitive economies, such as Switzerland, the Netherlands, Germany, Sweden, Denmark and Finland, that collectively generate robust regional locational advantages. Asia-Pacific shows a more uneven profile: advanced economies such as Singapore, Japan, Taiwan, South Korea and Australia display strong competitiveness, whereas emerging economies such as China, India, Indonesia and Thailand exert downward pressure on overall regional competitiveness. In North America, home-region competitiveness is strong for Canada and Mexico, both of which benefit from the USA’ high national competitiveness, but weaker for the USA itself, whose home-region score depends on Canada and Mexico, with Mexico’s lower national CSA reducing the weighted average. Overall, Europe provides the most cohesive and consistently strong home-region CSAs, North America remains robust but asymmetric and Asia-Pacific combines high national competitiveness in some economies with weaker conditions in others.

Global competitiveness, defined as the GDP-weighted CSA of countries outside the home region, shows a modest decline across all triad regions from 1999 to 2017, reflecting rising geopolitical tensions, cross-border frictions and uneven institutional performance across major emerging economies. Despite the overall downward trend, Asia-Pacific firms retain slightly stronger global competitiveness scores than North American firms by 2017, benefiting from the continued strength of Western Europe and North America as external regions and Asia’s increasing role as a source of technological and market dynamism. Overall, while global CSAs remain accessible, they have become more uneven and less favorable than in earlier decades.

One of key insights from Table 3 is that countries with weaker national CSAs can, and increasingly do, leverage strong home-region CSAs, as in Mexico leveraging US competitiveness, Eastern European firms drawing on German and Nordic strengths or Southeast Asian firms accessing Japanese and Korean technological ecosystems. Conversely, countries with strong national CSAs but weaker home-region or global CSAs (e.g. the USA and Japan) rely more heavily on domestic advantages in building FSAs. It implies that firms do not need strong national CSAs to develop competitive FSAs, when they can access regional or global CSAs. While this pattern may suggest some weakening of the traditional linkage (e.g. a partial decoupling) between FSAs and home-country CSAs, we interpret it primarily through a recombination logic, whereby firms remain embedded in their domestic contexts while enhancing their capabilities through regional and global locational advantages (Rugman and D’Cruz, 1993; Verbeke and Kano, 2016).

We integrate the findings from Tables 1–3 into an updated modified FSA/CSA matrix for 2017 (Figure 2). The matrix maps firms along two dimensions:

1. where FSAs are deployed (domestic, home-region and global) on the horizontal axis; and

2. where CSAs originate (national, home-region and global) on the vertical axis.

Consistent with internalization theory, transferring FSAs across borders continues to entail substantial incremental costs arising from various forms of distance (Ghemawat, 2007; Berry et al., 2010) and from the liability of (inter-regional) foreignness (Rugman and Oh, 2008). Many FSAs remain location-bound and cannot be profitably redeployed across regions (Rugman and Verbeke, 2001). These constraints, combined with the uneven global distribution of CSAs, shape the updated matrix patterns. The 2017 evidence confirms the enduring nature of regionalization while also revealing new configurations associated with multipolar globalization.

The 2017 matrix reveals a group of countries (i.e. India, China and South Korea) whose largest firms rely heavily on global CSAs, even though their sales remain predominantly domestic or regional. In 2008, India was the only country in this category (Rugman et al., 2012). India continues to exhibit stronger global than national CSAs in 2017, reflecting reliance on foreign markets, capital and knowledge networks; however, unlike 2008, some Indian firms (e.g. Reliance Industries and Tata Steel) now operate more globally, indicating a selective strengthening of transferable FSAs. A key shift between 2008 and 2017 is that China and South Korea move from home-region CSAs toward increased global CSA dependence. Firms in both countries rely heavily on technologies, natural resources, and supply-chain inputs worldwide. Yet the deployment of FSAs significantly differs: Chinese firms remain overwhelmingly domestic or regionally anchored, whereas South Korean firms increasingly recombine globally sourced CSAs with homegrown FSAs, resulting in footprints extending across domestic, regional and selectively global markets. This pattern is consistent with internalization theory: firms can exploit global CSAs only when they possess sufficient FSAs (Rugman and Verbeke, 2003).

In 2008, most countries were characterized by strong reliance on regional CSAs. By 2017, however, this configuration shifts noticeably. As regional competitiveness becomes more uneven, several countries, including Australia, Germany, the Netherlands, Switzerland and Taiwan, alongside the United States and Japan, move toward a pattern of strong national CSAs. US and Japanese firms remain in this cluster, displaying the same broad configuration observed in 2008: very strong national CSAs coupled with comparatively weaker home-region and global CSAs. European firms (e.g. Germany, the Netherlands and Switzerland) increasingly leverage robust national diamond conditions to use regional or even global FSAs. Taiwan similarly demonstrates strong national CSAs and appears disproportionately in positions associated with global FSAs.

Consistent with 2008, formerly state-owned Chinese and Russian firms, especially utilities and banks, remain predominantly domestic. Their FSAs are tied to government protection, administered markets or other nonmarket advantages, which are difficult to transfer even within the home region. Despite China’s substantial improvement in national competitiveness between 1999 and 2017, these firms show limited foreign reach, reflecting the persistence of location-bound FSAs.

Three country-pair comparisons further illustrate the diversity of FSA–CSA configurations across major economies. First, the contrast between the USA and China is particularly striking. Chinese firms draw on CSAs from around the world yet remain heavily oriented toward their domestic market. US firms, by contrast, rely on exceptionally strong national CSAs that enable them to compete both regionally and globally. As China continues to strengthen its national competitiveness and progresses along its learning curve, its MNEs may increasingly resemble US firms in the way they deploy FSAs. At the same time, rising tariffs, geopolitical tensions and nationalization policies could lead US firms either to consolidate domestically or to increase foreign investment as a strategy for circumventing new constraints.

Second, France and Germany highlight how differences in national CSAs shape international expansion paths within Europe. French firms, hampered by relatively weaker domestic CSAs, rely disproportionately on home-region competitiveness and therefore remain primarily focused on European markets. German firms, by contrast, draw on strong national factor conditions and supportive institutional environments of their national competitiveness from domestic market to regional and global markets. Their future trajectories will depend on whether France succeeds in rebuilding domestic competitiveness and whether Germany can sustain its outward reach amid evolving trade regulations and geopolitical pressures.

Finally, South Korea and Taiwan firms show how national conditions influence firms’ global integration in distinct ways. South Korean firms face rising labor costs and persistent political uncertainty, prompting greater reliance on global CSAs and more diversified market portfolios. Taiwanese firms, supported by strong national CSAs that are bolstered by innovation-oriented policies and moderate wage growth, have become particularly effective in global strategy. Going forward, South Korean firms will continue to grapple with heightened geopolitical risks, while Taiwanese firms may encounter cost pressures associated with wage increases, mirroring earlier developmental transitions experienced by Japan and South Korea as well as geopolitical tensions with Mainland China. Together, these comparisons underscore the heterogeneous pathways through which countries and their MNEs align FSAs with evolving national and regional CSAs.

A new and increasingly notable configuration in 2017 is the “regionally deployed, globally sourced” model. These firms maintain high intra-regional sales but acquire key CSAs, such as technology, natural resources, finance and supply-chain inputs, from outside their home region. This hybrid pattern was not prominent in 1999 or 2008 but emerges clearly in 2017, reflecting the post-2008 landscape of global knowledge diffusion, fragmented supply chains and multipolar globalization. Taking into these empirical patterns together, we revisit theory in light of hybrid regional–global configurations, derive policy-oriented implications and outline a future research agenda on dynamic FSA–CSA coevolution, digital/green competitiveness and regional resilience.

The results from updated data affirm the enduring value of the FSA/CSA framework while revealing that the structure of international competitiveness has evolved from a predominantly regional equilibrium to a more hybrid, multipolar configuration. Between 1999 and 2017, the regionalization thesis first articulated by Rugman and Verbeke (2004) and regional competitiveness demonstrated by Rugman et al. (2012) continues to hold in broad outline. That is, most of the world’s largest firms still earn the majority of sales and control most assets within their home triad regions. Yet the decade following the global financial crisis introduced new dynamics that cannot be captured by a purely regional lens. Our updated evidence shows that firms are simultaneously deepening their domestic foundations, extending regional integration and selectively recombining these with globally sourced locational advantages such as technology, knowledge and capital.

This study extends the regionalization perspective by providing a two-decade update to the modified FSA/CSA matrix and shows that the geography of international competitiveness has evolved rather than shifted fundamentally. The evidence confirms Rugman and Verbeke’s (2004) core insight that MNE competitiveness remains regionally anchored, but it also reveals a new hybrid pattern in which firms deploy their FSAs largely within their home region while sourcing critical CSAs across the globe. This emerging configuration is consistent with subsidiary-level findings that multinational firms differentiate value chain responsibilities, resource commitments and expatriate use across intra- and inter-regional scopes (Lee, 2019), further underscoring the coexistence of regional deployment and global capability sourcing. This hybrid structure refines internalization theory by illustrating how firms navigate the bounded rationality and reliability constraints of global expansion while still engaging in global capability acquisition (Rugman and Verbeke, 2003; Verbeke and Kano, 2016). It also echoes recent research showing that foreign subsidiaries increasingly operate as bridgeheads in global cities, linking regional operations to worldwide knowledge and resource networks (Asmussen et al., 2018).

Our results also deepen understanding of how locational advantages change over time. National, regional and global CSAs evolve unevenly across countries, reflecting shifting institutional, technological and competitive conditions (Narula and Dunning, 2010; Rugman and Verbeke, 2003, 2004). As firms adapt to these dynamics, they increasingly recombine CSAs across spatial scales, drawing on multiple forms of embeddedness rather than relying solely on advantages anchored in any single location (Oh et al., 2019; Rosa et al., 2020). Emerging evidence further shows that firms blend local and global knowledge sourcing in ways that connect city-level ecosystems with international technological networks, reinforcing the multiscalar nature of contemporary competitiveness (Cantwell and Zaman, 2018). Some economies leverage strong domestic diamond conditions to support outward expansion, whereas others compensate for weaker national CSAs by tapping into regional or global competitiveness. These patterns are consistent with recent analyses documenting how global value-chain participation alters national- and firm-level upgrading trajectories (Burlina and Di Maria, 2020; Gelei and Sass, 2021). These dynamics also help reconcile debates in the emerging market MNE (EMNE) literature: rather than following a single “springboard” or “regional” pathway, emerging-economy firms often blend regional deployment with global learning to access complementary assets, upgrade capabilities and navigate home-country constraints (Luo and Tung, 2007; Buckley et al., 2023; Buckley, 2017).

While these findings could be interpreted as partial evidence of a decoupling of FSAs from home-country CSAs, we interpret them instead through a recombination lens. Firms remain embedded in their domestic institutional and competitive environments, which continue to shape the foundation of their capabilities. Our results suggest that strong national CSAs are no longer a necessary or exclusive condition for FSA development. Instead, firms build FSAs through a recombination of locational advantages across domestic, regional and global levels (e.g. Rugman and Oh, 2013; Verbeke and Kano, 2016). When home CSAs are weak, firms engage in a compensatory form of recombination by accessing foreign sources of technology, capital, knowledge and intermediate inputs to offset domestic constraints (Rugman and D’Cruz, 1993). Although this pattern may seemingly resemble an “escape” logic, the underlying mechanism is not withdrawal from the home base but recombination of advantages across spatial scales. While many firms may seek to escape home-country constraints, only those able to explore and exploit foreign CSAs can effectively recombine them across locations. Importantly, this recombination logic is not limited to firms from countries with weak CSAs. Firms embedded in strong CSAs also engage in augmentative recombination, combining strong domestic advantages with complementary regional and global resources to further enhance their FSAs and stay competitive in regional and global markets. Taken together, these findings suggest that recombination across domestic, regional and global CSAs represents a general mechanism of FSA development in a multiscalar global economy. Nevertheless, future research may further examine the conditions under which this recombination process loosens the traditional linkage between national CSAs and FSA development.

Building on this, the hybrid regional–global configuration identified in our results can be understood more explicitly as a structured recombination of CSAs across spatial scales. Rather than representing a midpoint between regionalization and globalization, the hybrid pattern reflects a systematic process through which firms combine domestic, regional and global locational advantages to build and deploy FSAs (Rugman and Verbeke, 2004; Rosa et al., 2020). This perspective aligns with the asset recombination view in international business, which emphasizes firms’ capacity to integrate and reconfigure geographically dispersed resources as a dynamic capability (Asmussen et al., 2022; Lee et al., 2021). Recombination, therefore, is not incidental but constitutes a core mechanism through which firms navigate an increasingly complex, multilevel global environment. Firms may remain regionally anchored in their operations while simultaneously sourcing and integrating global knowledge, capital and supply-chain inputs, resulting in hybrid configurations characterized by multiscalar embeddedness. This interpretation extends the regionalization perspective by demonstrating that regional and global strategies are not mutually exclusive, but can be jointly enacted through structured recombination. In this sense, regional MNEs should be understood not as incomplete globalizers, but as efficient organizational forms that continue to evolve in response to shifting geopolitical, technological and environmental conditions (Verbeke et al., 2025a, 2025b).

Overall, the updated matrix portrays an international system that is neither fully global nor strictly regional, but one in which FSAs and CSAs coevolve across geographic levels. Competitiveness today is best understood as regionally rooted and globally linked: a hybrid, multidimensional structure shaped by the realities of multipolar globalization (Aiginger and Vogel, 2015), the diffusion and recombination of digital capabilities within firms (Ruel et al., 2021) and the complex interdependence and continual reconfiguration of GVCs (Burlina and Di Maria, 2020; Gelei and Sass, 2021). This perspective enriches regionalization theory by demonstrating that contemporary MNE competitiveness emerges from the interplay of regional anchoring and global connectivity, rather than from the dominance of either regional or global forces alone.

The updated evidence yields several implications for national and regional competitiveness policy. First, strong domestic foundations remain essential. The countries that maintained or strengthened competitiveness between 1999 and 2017, such as the USA, the Netherlands, Switzerland, Japan, Taiwan and Singapore, benefited from sustained investments in innovation systems, education, R&D, and institutional quality. In contrast, countries whose competitiveness declined (e.g. Canada, Austria, France, Spain, Australia and South Korea) were affected by structural rigidities, rising costs or political uncertainty. Policymakers must therefore prioritize advanced factor conditions and institutional coherence to sustain internationally competitive firms.

Second, regional integration continues to be a crucial platform for international competitiveness. Europe remains the most cohesive regional system, providing a dense and mutually reinforcing set of CSAs. North America retains strong regional advantages despite increasing asymmetry, while Asia-Pacific exhibits a more fragmented pattern, combining highly competitive economies with weaker institutional environments. Strengthening regulatory alignment, talent mobility and cross-border infrastructure within regions can amplify regional CSAs and help compensate for national-level weaknesses.

Third, the findings show that global capability sourcing is increasingly central to firm success. Policymakers must preserve openness to global technology, knowledge networks, and investment flows. Protectionist measures that restrict firms’ access to global CSAs may undermine domestic competitiveness, especially in economies that depend on international knowledge ecosystems.

Finally, rising geopolitical tensions underscore the need for balanced strategies that combine openness with resilience. Governments should support outward foreign direct investment (FDI), supply-chain diversification, and participation in GVCs while preparing for contingent disruptions. The updated matrix highlights that competitive advantage is sustained when domestic institutions, regional integration and global learning channels reinforce one another.

For managers, the findings suggest that home region remains the dominant strategic dimension. Firms should prioritize competitive intensity, customer understanding and institutional sensitivity within their home region, as these markets continue to account for the majority of revenue and investment among the world’s largest MNEs.

At the same time, global learning has become indispensable even for regionally focused firms. Managers must strengthen their ability to source technology, knowledge and supply-chain capabilities globally through partnerships, alliances, cross-border R&D and targeted acquisitions. The hybrid pattern identified in 2017 indicates that regional deployment increasingly depends on global inputs.

Managers must also upgrade organizational capabilities to navigate cross-border risks. These include supply-chain vulnerability, regulatory divergence, data governance, and geopolitical uncertainty. Firms that excel at orchestrating global knowledge flows, managing political risk and coordinating dispersed value chains are more likely to convert CSAs into non-location-bound FSAs.

Taken together, the results point toward a strategic logic in which firms compete regionally while upgrading globally, a model that requires balancing proximity with interconnectedness.

This study is not without limitations. First, it relies on geographic segment self-disclosures from the Fortune Global 500 firms. Although these firms represent a substantial share of world trade and FDI, segment reporting remains uneven across industries, countries and over time. Consequently, the patterns observed here may not extend to midsized MNEs, digital-platform firms or born-global firms whose internationalization models differ markedly from large incumbents in our observation period. Second, our CSA measures are based on PCA of the WEF GCR. While widely used, these indicators rely partly on executive perceptions and may overlook emerging drivers of competitiveness, including digital governance, environmental policy, and GVC positioning, which are gaining importance in today’s business. Future research using alternative institutional data sets or richer microlevel measures could refine and extend the framework.

Furthermore, while this study provides a rare longitudinal view of international competitiveness, it also exposes several gaps that warrant deeper investigation from international business and competitiveness scholars. First, future research should examine how FSAs and CSAs coevolve dynamically over time. Longitudinal or panel-based designs could track how changes in institutional quality, digital infrastructure or sustainability policies reshape firms’ capability portfolios. Integrating our cross-sectional FSA/CSA metrics with firm-level financial and innovation data would help uncover causal feedback loops and address a central question:

Second, the postcrisis decade has given rise to a world of multipolar institutional logics, ranging from liberal market economies to coordinated and state-capitalist systems. Comparative research could investigate how different state roles shape the translation of CSAs into FSAs. For example, China’s industrial policy or Korea’s chaebol governance may produce trajectories that diverge from those associated with European stakeholder capitalism. Examining these variations would extend theories of competitiveness beyond the traditional Western benchmarks embedded in Porter’s and Rugman’s frameworks. A central research question emerges:

Third, digitalization and sustainability are emerging as important sources of both FSAs and CSAs. Digital infrastructure, data governance and renewable energy transitions increasingly shape competitiveness across a wide range of industries. Future research could incorporate digital and environmental indicators into the FSA/CSA matrix to examine whether digital FSAs (e.g. platform capabilities and AI systems) or green CSAs (e.g. carbon pricing regimes and clean-technology clusters) facilitate or constrain regional versus global expansion. The intersection of environmental policy and competitiveness, which is an area long emphasized in Competitiveness Review, offers a particularly promising avenue for advancing these inquiries. A key research question follows:

Fourth, the reconfiguration of GVCs in the wake of COVID-19, alongside rising geopolitical tensions (such as U.S.–China trade disputes and energy security concerns), underscores the need to examine regional resilience. Future research could extend our framework to assess how external shocks change regional and global competitiveness. Simulation approaches or network models may help capture how MNEs rebalance production and sales across triads under stress, offering insight into the evolving geography of competitiveness. Thus, a key question would be:

Finally, future research should examine how the increasingly fragmented global economic environment since the late 2010s may reshape the balance among national, home-region and global CSAs. Recent developments – such as trade wars and tariff escalation, conflicts over strategic resources (including oil-related conflicts and the scramble for critical minerals), broader geopolitical tensions and supply-chain reconfiguration – may render global locational advantages more uneven, strategically contested and politically contingent, thereby increasing the importance of home-region embeddedness. Under these conditions, hybrid regional–global configurations may become more prevalent as firms attempt to maintain global reach while enhancing regional resilience and securing access to strategically important inputs and capabilities. An important question for future research, therefore, is whether these geopolitical and regulatory changes reinforce, weaken or transform the competitiveness logic underlying such configurations.

In sum, this study updates the regional MNE perspective for a new era, showing that while large MNEs remain regionally anchored, many now combine regional deployment with globally sourced capabilities. This hybrid pattern reflects the realities of multipolar globalization, digital transformation and shifting value chains. Our findings refine understanding of how FSAs and CSAs evolve and provide a foundation for future research on how firms adapt to geopolitical uncertainty, institutional diversity and emerging technological and environmental pressures.

The authors thank the editor, Philippe Gugler and anonymous reviewers for their insightful and constructive comments. The authors also acknowledge the assistance of Adrian J. Oh, Blue Valley Northwest High School, Kansas, with data collection and management.