Clustering and interorganizational dynamics in foreign market entry strategies. Evidence from Chinese MNEs

Resumen

Owing to the globalization and economic integration worldwide, countries and markets become more independent, and companies and people are all inevitably involved in the global marketplace. This situation increases the importance of international management (IM) in nowadays business practice and the relevance of study on it. The essential focus of IM research is on multinational enterprise (MNE) strategies, among which the foreign market entry strategies have been underlined and received a great deal of attention. The carried out research aims to increase the knowledge on MNE’s behaviors and strategic decisions in foreign direct investment (FDI). We first gave a retrospective look at foreign entry mode literature and later focused specifically on the location aspect in this decision. We went beyond the national-level conditions and studied the potential association between entry mode and location strategies by comparing two different types of clustering in the context of FDI. The empirical results confirmed our hypotheses and suggest the interdependence of MNE’s entry mode strategy and colocation strategy as combined ways to overcome entry barriers. Moreover, the curiosity about the reason of the heterogeneity existed in MNEs’ foreign expansion patterns drove us to take a step back and looked into investors’ internal factors in the study. The additional analysis reveals that there are significant differences in the structural and strategic characteristics of MNEs who have preferred different colocation strategies in FDI. This research has several implications. It connects two fundamental entry decisions in FDI and looked beyond the effects of economic or institutional variables. The emphasis on interorganizational dynamics extends the understanding of investors’ interactions with their immediate environment and the consequent influences on their behaviors.