INTERORGANIZATIONAL LEARNING AND THE LOCATION OF MANUFACTURING SUBSIDIARIES: IS CHAIN MIGRATION ALSO A CORPORATE BEHAVIOR?

Clusters of foreign manufacturing plants are traditionally explained by characteristics of the entry location such as immobile resources or agglomeration advantages, but an alternative explanation is that social or economic relations among firms in the home country facilitate interorganizational learning about entry locations. Such interorganizational learning reduces uncertainty, leading to heterogeneous diffusion of the plant location choices among organizations that are socially proximate in the home country. We examine this hypothesis through analysis of the effect of industry, lending ties, and board interlocks among Japanese firms on their entries into Europe, and find that shared industry and structural equivalence in the board interlock network are strong predictors of mimetic nation choice. The findings suggest that nation choices follow an innovation diffusion pattern, and that Japanese firms have paths of influence like those of U.S. firms.