Regional Integration and the Death of Distance: How Country Borders Inside the European Monetary Union Have Become Irrelevant to Multinational Strategy

The creation of the European Monetary Union (EMU) has provided attractive internal expansion opportunities for 'insider' multinational enterprises (MNEs). We investigate the impact of regional integration on MNE strategies by analyzing Belgian MNEs entering foreign markets, both EMU and non-EMU ones. Our analysis demonstrates that both the EMU as well as the wider - but less integrated - European Economic Area (EEA), have dramatically reduced the impact of national institutional risk and cultural distance on insider MNE operating mode choices. Regional integration has triggered the 'death of distance' with country borders becoming irrelevant to MNE strategy.