Country-of-Origin and Industry FDI Agglomeration of Foreign Investors in an Emerging Economy

17 Pages Posted: 20 Apr 2011

See all articles by Danchi Tan

Danchi Tan

National Chengchi University (NCCU) - Department of International Trade

Klaus E. Meyer

China Europe International Business School (CEIBS); Copenhagen Business School - Center for East European Studies (CEES)

Date Written: May 2011

Abstract

Foreign investors access local knowledge by co-locating with other foreign direct investment (FDI) firms. However, different aspects of local knowledge can be obtained from different local businesses. Thus some foreign investors co-locate with FDI firms from the same country of origin, while others co-locate with foreign industry peers. We argue that, relative to industry FDI agglomeration, country-of-origin agglomeration provides an effective channel for the sharing of sensitive and tacit knowledge about local business environments. Therefore foreign investors in need of such local knowledge are more likely to locate in country-of-origin agglomerations. Empirical evidence based on FDI in Vietnam indicates that foreign investors who perceive local institutions as particularly weak, and those with a high degree of outsidership in the local environment, are more likely to seek country-of-origin agglomerations than industry FDI agglomerations.

Suggested Citation

Tan, Danchi and Meyer, Klaus E., Country-of-Origin and Industry FDI Agglomeration of Foreign Investors in an Emerging Economy (May 2011). Journal of International Business Studies, Vol. 42, Issue 4, pp. 504-520, 2011. Available at SSRN: https://ssrn.com/abstract=1816015 or http://dx.doi.org/10.1057/jibs.2011.4

Danchi Tan (Contact Author)

National Chengchi University (NCCU) - Department of International Trade ( email )

64 Chih-nan Road, Sec. 2
Taipei 11623, Wenshan
Taiwan

Klaus E. Meyer

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

HOME PAGE: http://www.ceibs.edu/faculty/facultylist/09/100132.shtml

Copenhagen Business School - Center for East European Studies (CEES) ( email )

Porcelanshaven 24
2000 Frederiksberg
Denmark

HOME PAGE: http://www.klausmeyer.co.uk

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