Business cooperation and the exchange of information and knowledge are actions and decisions that firms can build in order to compete more effectively in globalized markets. These options are even more relevant for SMEs to access and expand in new international markets and through more commitment entry modes as foreign direct investment (FDI).
While studies on the role of local externalities are well established in the Economic Geography literature, its international dimension is still unexplored in deep. This is surprising when the survival and growth of the subsidiaries depends on the efficient adjustment with its context. The objective of this paper is to analyse the perceptions of the role that country-of-origin clusters play in a sample of 24 managers from European SMEs subsidiaries located in China. Our results suggest that the higher value of the externalities are perceived in the dimensions of networking and legitimacy, and when the subsidiary pursues simultaneously efficiency and markets in their investments.