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Multi-market Contact and Foreign Entry Location Decisions in China

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Abstract

Location decisions of foreign subsidiaries in China were studied from the multi-market contact (MMC) perspective. Two sets of data in different industries, data on 1096 location decisions by US manufacturing ventures from 1979 to 1995 and data on 1108 location decisions by international hotels from 1990 to 2012, were analyzed. Contacts between an entrant and the incumbent firms in a target market were studied, but also contacts among those incumbent firms themselves. The two types of contact were shown to have distinct and interactive effects on foreign entry location choices across both samples. Besides, the influence of multi-market contact on foreign entry decisions was contingent upon the cultural distance between the home and host countries. These results promise to improve our understanding of the impact of multi-market competition on location decisions in the international setting.

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Notes

  1. We thank all three anonymous reviewers for pointing out these points.

  2. We thank one anonymous reviewer for pointing out this point.

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Acknowledgments

We are grateful to Editor Joachim Wolf and anonymous reviewers for their insightful feedback during the review process. The research is supported in part by the Research Grants Council of Hong Kong (HKUST #16501814).

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Authors and Affiliations

  1. Department of Business Administration, College of Business, University of Illinois at Urbana-Champaign, Champaign, USA

    Fiona Kun Yao

  2. Department of Management, School of Business and Management, Hong Kong University of Science and Technology, Clear Water Bay, Hong Kong

    Jiatao Li

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  1. Fiona Kun Yao
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Correspondence to Jiatao Li.

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Yao, F.K., Li, J. Multi-market Contact and Foreign Entry Location Decisions in China. Manag Int Rev 56, 95–122 (2016). https://doi.org/10.1007/s11575-015-0264-5

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