Journal article

Publication year: 2014

Pages: 285-300

Journal: Journal of Economic and Human Geography

Volume number: 105

Issue number: 3

ISSN: 0040-747X

eISSN: 1467-9663

DOI Link: https://doi.org/10.1111/tesg.12064

Publisher: Wiley

Abstract: 
The success of foreign direct investment (FDI) from developing countries to developed countries is critically dependent on managing the differences in the knowledge bodies of the regions and players involved. The theories that at least partly explain successful FDI of this kind use the terms cognitive distance and embeddedness. Most of the empirical research takes the perspective of regions and has addressed the problem of becoming embedded in the host regions. This paper takes the firm perspective and examines cognitive distance regarding not only the host region, but also the knowledge of the firms involved. It uses qualitative information from an extensive study of Chinese affiliates in Germany. In contrast to many other studies, this paper shows that a fast and successful process of becoming embedded in the host region can hamper the subsidiary's success, as it may cause conflict with the parent firm.

Harvard Citation style: Si, Y. and Liefner, I. (2014) Cognitive Distance and Obstacles to Subsidiary Business Success-The Experience of Chinese Companies in Germany, Journal of Economic and Human Geography, 105(3), pp. 285-300. https://doi.org/10.1111/tesg.12064

APA Citation style: Si, Y., & Liefner, I. (2014). Cognitive Distance and Obstacles to Subsidiary Business Success-The Experience of Chinese Companies in Germany. Journal of Economic and Human Geography. 105(3), 285-300. https://doi.org/10.1111/tesg.12064