Resumo

In this article, we propose that institutions are mostly asymmetric within countries, varying between cities and regions due to different economic, social and governmental backgrounds. We propose that these differences will have an impact on the innovativeness of regions and thus will determine international R&D subsidiary location-choice. We contribute to international business theory by building a model to explain within-country location choice of Research and Development-driven subsidiaries.

Our objective in this paper is to propose that institutional and economic contexts are asymmetrical across regions within the same country, affecting innovativeness, and point out propositions of how these asymmetries can affect subsidiary location-choice. We therefore produce a series of propositions of how these differences may affect international strategies of firms. We contribute to international business theory by proposing a model that integrates economic factors, institutional factors, innovativeness factors and geographic factors to explain within-country location choice.

Themes such as subnational region variations (Dai et al., 2013), global cities (Goerzen et al., 2013) and microfoundations of spatial perception (Piscitello, 2011) have been explored in IB and EG theories. In an innovation perspective, national innovation systems have been studied (Nelson, 1993, Lundvall, 2007), as well as regional innovation systems (Cooke et al., 1997). In this paper, we build on Institutional Theory, Economic Geography and Innovativeness to propose a model to explain within-country international R&D subsidiary location choice.

Our paper is conceptual.

Clusters will be impacted by geographic factors, since firms will more likely agglomerate near natural resources and geographic centers, economic agglomeration will also become attractive, bringing more firms to agglomerate (Winters, 2013), this agglomeration will change institutional context by isomorphic behavior and by changing local policy, which will also change the innovativeness of the locality. This has important impacts for firms since clusters are important to the understanding of location choice (Kim & Aguillera, 2015).

Within-country location choice is a topic that is still understudied in International Business and should receive more attention. Differences amongst regions are due to several factors and all these factors contribute to a different outcome in location choice. It is important for researchers to not only consider border effects when studying location choice, but also the regional effects, as these seem to be highly neglected in literature. Country and border effects are very important, but we suggest that regional effects must also be taken on account.

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