Professor Yong Li (Business, Troesh Center for Entrepreneurship and Innovation) had a paper accepted for publication by the Strategic Management Journal. The paper is titled, "Stronger Together: Country-of-Origin Agglomeration and MNE Location Choice in an Adverse Institutional Environment." It addresses this question: Why do multinational enterprises (MNEs) locate near compatriot firms in a foreign location? The commonly recognized benefits include resource access and knowledge spillover from interactions with market forces such as suppliers and customers. The paper proposes that co-location with compatriot firms can also help MNEs navigate an adverse institutional environment by generating “stronger-together” benefits. Co-location can enable collective actions and create collective gains for MNEs in their interactions with the host government. The empirical analysis finds that after a diplomatic dispute, Korean MNEs are more attracted to locations in China that already have a cluster of Korean firms, whether in the same/related industries or in unrelated industries; this is particularly the case for small MNEs and in locations with weak institutions.
