Generic and specific social learning mechanisms in foreign entry location choice

Abstract

We combine economic and institutional theories of clustering in foreign entry location choice in an overarching social learning conceptualization. Prospective entrants learn about the attractiveness of alternative locations by observing the entry choices of previous investors ('models'). We distinguish two types of learning that differ in observational focus width but can and do operate simultaneously. With assessment learning, firms judge the economic feasibility and agglomeration benefits of entering a location by observing and following a broad set of models. With bandwagon learning, firm-level uncertainty narrows attention to, and prompts the following of, specific models, with recentness of model behavior an important moderator. We find broad support for our conceptualization in an analysis of the entries of 692 Japanese electronics firms into Chinese provinces during 1979Chinese provinces during -2001 1313 Hypothesis 1a (assessment learning): The larger the total number of previous entries in a region by model firms, the greater the odds that a firm will choose that region.

Decomposing Uncertainty and Its Effects on Imitation in Firm Exit Decisions

“…In line with previous findings on the influence of firm uncertainty (Belderbos et al 2011;Delios 2001, 2004), we find that uncertainty stemming from volatility in a focal firm's performance increases its tendency to imitate. In contrast, the uncertainty stemming from volatile markets has an effect on every firm's decision making.…”

“…Organization theorists have examined how exit from product markets, market segments, or foreign markets is shaped by other firms exiting previously (Belderbos et al 2011, Dobrev 2007, Greve 1995, Henisz and Delios 2004. Various causal mechanisms have been invoked to explain this interorganizational dependency.…”

German and Austrian Foreign Direct Investment in Brazilian Regions: Which Are the Location Choice Factors?

“…Foreign entrants may look to other foreign firms to provide guidance on how to deal with simultaneous pressures from the parent firm as well as the host country (Kostova and Zaheer, 1999;Meyer et al, 2011). Empirical evidence strongly supports the idea that an existing foreign base in a location attracts additional foreign entry (Chang and Park, 2005;Tan and Meyer, 2011;Belderbos et al, 2011;Mukim and Nunnenkamp, 2012;Lee et al, 2012).…”

Location Strategies of Multinationals from Emerging Countries in the EU Regions

“…According to Belderbos et al (2011) if MNEs are uncertain about alternative locations they tend to follow other firms, and in particular companies from the same country and in the same industry.…”

“…This paper aims to contribute to this ongoing debate by shedding new light on one particular aspect of EMNEs strategies that remains significantly under-explored in the existing literature both in International Business Studies and Economic Geography (Dunning 2009): their international location decisions at both the national and sub-national levels. The choice of appropriate locations for their subsidiaries is strictly related to the internalisation motivations of MNEs (Belderbos et al, 2011;Dunning, 2009) and a systematic comparative analysis of the spatial location behaviour of EMNEs and AMNEs makes it possible to unveil similarities and differences in their investment motives comparing the importance of national-level vs. regional characteristics. The paper aims to answer a set of fundamental questions linked to the location strategies and spatial behaviour of EMNEs: what are the characteristics of the destination areas that matter the most for EMNEs?…”