Abstract
One criteria regarding where to invest in foreign markets is linked to the international social capital (ISC) that exists on the place, which enables the access to local knowledge and other location-specific advantages. There are alternative ways to create and make use of that ISC that are still unexplored by International Business literature. In this paper, we study the geographic communities of practice (CoP) that are formed by FDI firms from the same country-of-origin (the so-called country-of-origin clusters). For that purpose, the paper adopts a qualitative methodological approach through an inductive case study of expatriates from 13 Spanish subsidiaries co-located in China. Our findings suggest that there are particular mechanisms based on the informal connections and repeated interactions facilitated by a common language and non-competitive relationships that create an ISC in the CoP. Moreover, our analysis shows there is a heterogeneity in the way these mechanisms are developed and used by the member firms, and this is due to organizational and individual factors, as well as leadership dynamics. Our work contributes to Internationalization and Network theories by identifying unexplored mechanisms through which the ISC is developed at the host country level. Besides, it helps identifying competences (i.e. clustering competences) that help expatriate managers to be successful in their international assignments.
Highlights
Foreign direct investment (FDI) is a decision that implies dealing with the location choice
The paper adopts a qualitative methodological approach through an inductive case study developed with 13 managers to look for patterns and describe the relationships among the expatriates of Spanish companies co-located in Mondragon Kunshan Industrial Park based in Jiangsu, China
By focusing our research in China we recognize the importance of clustering when doing business in distant markets
Summary
Foreign direct investment (FDI) is a decision that implies dealing with the location choice. Important aspects of this decision are related to the identification, study and selection of a location and the prediction of how this location may change. Jain et al (2016) and Nielsen et al (2017) have published extensive literature about the factors that attract FDI, and from their work we can conclude that, in IB research on foreign location choice, the place matters more than the space. One of the phenomena that has been most researched in the current literature on location choice is FDI agglomerations. The research done is scarce and there are not many studies that analyse the location choice when the firms have the same nationality (country-of-origin clusters) (COC) (Alcacer and Chung, 2014; Alfaro and Chen, 2014)
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