Dragon dance: Joining steps, gaining success

Urzelai, Berrbizne; Puig, Francisco

Abstract

Studies on agglomeration economies are well established (Chang and Park 2005; McCann and Folta 2008; Shaver and Flyer 2000) but the phenomenon of country-of-origin agglomeration has aroused attention of scholars in the field of international business entry in recent years, especially at the host-country-level. In this paper we explore the externalities of country-of-origin foreign direct investment agglomeration and its impact on the entry decision and reduction of liabilities in Asian markets. The paper adopts a qualitative methodological approach to analyze small and medium sized subsidiaries in China.
Evidence suggest that depending on factors such as time of entry, activity or co-location the subsidiaries differ in terms of the reasons to enter in China, to establish their operations in or outside a compatriot cluster, their current performance, as well as the advantages that they obtain from being clustered or isolated. Legitimacy and reputation, the acquisition of local market knowledge and social value of networking are especially relevant externalities for the firms. We found the role and leadership of network facilitators are crucial for the entry decision and functioning of the firms within the cluster as they act as umbrella structures in the host country.
Our work contributes to the agglomeration and network theories on international business by analyzing the formation and influence of country-of-origin clusters at the host country level. From a practical point of view this research could help business practitioners to take decisions regarding the location mode and the management of their strategic network resources through country-of-origin clusters to reduce risks, gain legitimacy, share knowledge and thus be more successful on their international development in Asian markets.

• Presentation Conference Type: Conference Paper (unpublished)
• Conference Name: Clustering 2016 - International Conference on Clusters and Industrial Districts
• Start Date: May 10, 2016
• End Date: May 12, 2016
• Deposit Date: Apr 26, 2022
• Public URL: https://uwe-repository.worktribe.com/output/9314393