What subnational analysis could mean for IB research? Evidence for home bias reversals based on catchment area alcohol sales in Ontario

Abstract

Research at the subnational level typically uses borders which are politically determined or arbitrary, and hence not necessarily based on the markets which foreign firms target in their international business strategies. The current paper extends the international business literature at the subnational level by using markets identified through the profit maximizing lens of a host-country retailer, which is a conceptually more appealing methodological approach for firms wishing to enter a local market through exports. Evidence of home bias reversals at the catchment area level provides important insights for more refined market entry strategies, which may be missed at other subnational units of analysis. This study therefore establishes the importance of subnational analysis at the catchment area level and uses the reversal of domestic-country bias effects as an example to prove the importance of this methodological approach. The benefits of such an approach are tested using the sale of domestic and imported alcohol across catchment areas for a multi-location retailer in the province of Ontario.