Sihong Wu, Xinli Huang, Di Fan, Yongjian Li, Yiyi Su

Transportation Research Part E, 103039, 2023

Recommend Reason

The past two decades have witnessed the rapid penetration of emerging market multinational enterprises (EMNEs) into global production networks. Although existing literature documents the agglomeration effect of industrial clusters in affecting firms’ strategic decisions, less is known about how the heterogeneous cluster linkages at the national level affect the foreign market expansion of EMNEs. Based on a supply chain perspective, this study investigates the different cluster linkages between countries based on their upstream/downstream relations. This study informs a more holistic understanding of the complexity of global production networks, considering the interplay between firms, clusters, and institutions.

About the Author

Sihong Wu, University of Auckland

Xinli Huang, WU Vienna University of Economics & Business

Di Fan, RMIT University

Yongjian Li, Nankai University

Yiyi Su, School of Economics and Management, Tongji University

Keywords

Global production networks, Cluster linkages, Upstream/downstream relations, Firm-cluster relatedness, International expansion, Institutional voids

Brief Introduction

Drawing from insights from supply chain management research, this study attempts to provide a holistic understanding of how the varying global production networks affect firm expansions. Going beyond the literature on supply chain management, we position our work to integrate the heterogeneity of cluster linkages at the national level to examine an essential international business phenomenon – the expansionary entries and post-entry performance of emerging market firms. Our empirical findings reveal that the U-D and D-U cluster linkages between home and host countries exert significantly different impacts on the EMNEs’ expansion momentum – the U-D linkages negatively affect their expansionary entries, while the D-U linkages exert positive effects. We also find that the impact of cluster linkages on firm expansion is significantly affected by firm-cluster relatedness. In terms of the performance outcomes, our results show that EMNEs expanding based on the cluster networks can yield better performance, and host-country institutional voids will strengthen such a relationship. Overall, this study informs a more in-depth understanding of the effects of global production networks by elaborating on the interplay between firms, clusters, and institutions.