Adaptation or Imprinting: Exploring the Relationship between National Institutions and Agglomerati

Abstract

One of the long-standing debates in the global strategy literature revolves around whether firms preserve home country patterns of behavior or adapt to host-country patterns of behavior when expanding abroad. In this study we extend this analysis to location decisions; specifically, the choice of whether to agglomerate in the host country. We theorize that the cultural, political, and economic characteristics of the host and home country each impact the agglomeration patterns of foreign entrants in the global semiconductor industry. Empirically, we adopt a new method to account for country selection when modeling the agglomeration decision. We find that foreign entrants prefer to agglomerate in host countries characterized by collectivist cultures, political uncertainty, and economic uncertainty. Home country institutional characteristics have little impact. These results suggest that the decision to agglomerate is context-dependent, though characterized by a strong country- of-destination effect whereby ...