Ethnic networks and multinational firms’ location decisions
Review of International Business and Strategy
ISSN: 2059-6014
Article publication date: 5 May 2020
Issue publication date: 1 June 2020
Abstract
Purpose
The purpose of this study is to identify the effect of ethnic networks on firms’ location decisions using social network theory and the homophily principle.
Design/methodology/approach
A traditional gravity model is used on a sample composed of high-skilled and low-skilled ethnic networks and multinational enterprises (MNEs) from Latin America, North America and the European Union.
Findings
Contrary to findings of previous studies, ethnic networks do not appear to influence location decisions of Latin American firms expanding into countries from North America and the European Union. This might be because of weak ethnic connections among the players.
Practical implications
Managers must be aware that ethnic networks not always can be used for the strategy of the firm, at least regarding location.
Social implications
Governments and entrepreneurial and immigrant associations from home and host countries could develop initiatives addressed to strengthening the links between the members of the networks.
Originality/value
This study extends the social network theory in the sense that ethnic networks do not always positively affect firms’ location. Moreover, it is important to consider the specific context or features of the members of a network before analyzing its effects on firms’ location.
Keywords
Acknowledgements
Acknowledgments: The authors would like to thank the editor, Hussain Rammal, as well as anonymous reviewers for their helpful comments and suggestions provided.
Citation
Alcaraz, J., Salamanca, E. and Regalado-Pezúa, O. (2020), "Ethnic networks and multinational firms’ location decisions", Review of International Business and Strategy, Vol. 30 No. 2, pp. 279-298. https://doi.org/10.1108/RIBS-11-2019-0152
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited