General and Specific Social Learning Mechanisms in Foreign Investment Location Choice

R.A. Belderbos, W. van Olffen, J. Zou

Research output: Contribution to journalArticleAcademicpeer-review

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 1979-2001. Copyright.

Original languageEnglish
Pages (from-to)1309-1330
Number of pages22
JournalStrategic Management Journal
Volume32
Issue number12
DOIs
Publication statusPublished - Dec 2011

Keywords

  • foreign entry
  • multinational firms
  • location choice
  • agglomeration
  • mimicry
  • MANHATTAN HOTEL INDUSTRY
  • UNITED-STATES
  • DIRECT-INVESTMENT
  • INTERNATIONAL EXPANSION
  • INTERORGANIZATIONAL IMITATION
  • MIMETIC ISOMORPHISM
  • FIRM HETEROGENEITY
  • BUSINESS GROUPS
  • JAPANESE FIRMS
  • PROBIT MODELS

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