“Courting the multinational”: Subnational institutional capacity and foreign market insidership

Abstract

Significant contemporary challenges face an internationalizing firm, including the non-ergodic nature of investment, and the liability of outsidership. Recent revisions to the Uppsala internationalization process model reflect these challenges, whereby “insidership” is represented as realized, successful foreign market entry. Drawing upon socio-spatial concepts from international business and economic geography, this paper demonstrates the endogeneity of subnational institutions in shaping foreign market insidership within an advanced economy. Employing a multi-method research design with almost 60 subnational actors, the role and interaction of subnational institutions within the internationalization process are explored. Our findings illustrate how customized coalitions of subnational institutions effectively initiate, negotiate and accelerate insidership of inward investment within the foreign market both prior to and during formal entry. Key aspects of this dynamic include communicating tangible and intangible locational resources, initiating functional and relevant business relationships, and facilitating access to codified and tacit knowledge. This paper embellishes the Uppsala internationalization process model by demonstrating the capacity of subnational institutions to participate actively with foreign market insidership, and in so doing advances understanding of how the risk and uncertainty associated with foreign market entry are currently navigated.