The decision to expand operations into foreign markets, or internationalize, is one of the most important strategic decisions made by multina tional enterprises (MNEs) (Goerzen and Beamish, 2003; Hitt et al., 1997). As a result, factors that infl uence how much and where to internationalize have attracted much attention in the scholarly literature using a number of diff erent theoretical perspectives. One perspective acknowl edges the importance of institutions. Here, scholars have focused on country-level infl uences whereby location-specifi c institutional factors aff ect the MNE’s ability to exploit its resources in host coun tries and thereby infl uence its internationalization decisions in these countries (for example, Chan et al., 2008; Gaur et al., 2007; Meyer et al., 2009). Recently, a second stream of research has focused on MNEs’ international strategy of semiglobalization. The ‘semiglobalization’ perspective emphasizes the importance of regions in MNEs’ international strategy as their regional coordination helps them to main tain local responsiveness and exploit region-bound fi rm-specifi c advantages (Ghemawat, 2003, 2007; Rugman and Verbeke, 2004, 2005). These two streams of research have developed independently, leaving gaps in our understanding of whether and how regions matter in MNEs’ international strat egy. For instance, there is a need for a greater understanding of how formal institutions infl uence internationalization decisions at the country and regional levels (Chan et al., 2008).