The Internationalization of Retailing and 1992 Europe

The internationalization of retailing has been relatively slow if compared to the internationalization of manufacturing industries. However, the pace of cross-border investments by retail companies has been increasing in recent years. This trend has been particularly visible in Europe, as a consequence of the completion of the common market (project 1992). The author considers the case of direct foreign investment (DFI) by retail companies, focusing on their motives and means, and reviews the evidence available with respect to Europe. While there are a number of recent articles which investigate the existing patterns of DFI by retail companies, not much has been done in trying to analyse this evidence using the well established concepts developed by industrial organization literature. The first aim of the article is to review these concepts and see if, and to what extent, they can be useful to understand the patterns of DFI in retailing. Since the main reason for investing abroad lies in some form of innovation advantage, the nature of retail innovation, both process and product innovation, is considered, stressing its organizational nature. On this basis, a typology of motives for DFI by retail companies is obtained. DFI by retailers within the European Community is then considered and an attempt is made to use the descriptive model developed in the previous sections to interpret this evidence.