Does Institutional Distance Still Matter?: Industry Standards and Global Sourcing Location Choices

Marcus Møller Larsen, Stephan Manning

    Research output: Contribution to conferencePaperResearch

    Abstract

    This paper adds nuance to our understanding of institutional antecedents of foreign investment, in particular in global services sourcing. While prior research has stressed the various risks and effects associated with home-host country differences in national-level institutions, e.g. legal systems, we argue that industry-specific, yet often transnational field institutions, e.g. standards, have become critical factors in driving sourcing location decisions. Using data from the Offshoring Research Network, Kaufmann institutional indicators, and data on ‘capability maturity model integration’ (CMMI) process standard adoption, we show that sourcing location choices are indeed negatively impacted by institutional differences between home and host country, i.e. ‘distance’ still matters, but they are positively impacted by CMMI standard adoption in host countries, and standard adoption negatively moderates the importance of distance. Findings promote a more contextual, multi-level understanding of institutional antecedents of foreign firm location choices, which also has important policy implications in particular for emerging economies.
    This paper adds nuance to our understanding of institutional antecedents of foreign investment, in particular in global services sourcing. While prior research has stressed the various risks and effects associated with home-host country differences in national-level institutions, e.g. legal systems, we argue that industry-specific, yet often transnational field institutions, e.g. standards, have become critical factors in driving sourcing location decisions. Using data from the Offshoring Research Network, Kaufmann institutional indicators, and data on ‘capability maturity model integration’ (CMMI) process standard adoption, we show that sourcing location choices are indeed negatively impacted by institutional differences between home and host country, i.e. ‘distance’ still matters, but they are positively impacted by CMMI standard adoption in host countries, and standard adoption negatively moderates the importance of distance. Findings promote a more contextual, multi-level understanding of institutional antecedents of foreign firm location choices, which also has important policy implications in particular for emerging economies.

    Conference

    ConferenceLocation Decisions of Multinational Enterprises
    LocationFæstningens Materialgård (The Fortifications Depot)
    CountryDenmark
    CityCopenhagen
    Period11/05/201512/05/2015
    Internet address

    Keywords

      Cite this

      Møller Larsen, M., & Manning, S. (2015). Does Institutional Distance Still Matter? Industry Standards and Global Sourcing Location Choices. Paper presented at Location Decisions of Multinational Enterprises, Copenhagen, Denmark.
      Møller Larsen, Marcus ; Manning, Stephan. / Does Institutional Distance Still Matter? Industry Standards and Global Sourcing Location Choices. Paper presented at Location Decisions of Multinational Enterprises, Copenhagen, Denmark.36 p.
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      title = "Does Institutional Distance Still Matter?: Industry Standards and Global Sourcing Location Choices",
      abstract = "This paper adds nuance to our understanding of institutional antecedents of foreign investment, in particular in global services sourcing. While prior research has stressed the various risks and effects associated with home-host country differences in national-level institutions, e.g. legal systems, we argue that industry-specific, yet often transnational field institutions, e.g. standards, have become critical factors in driving sourcing location decisions. Using data from the Offshoring Research Network, Kaufmann institutional indicators, and data on ‘capability maturity model integration’ (CMMI) process standard adoption, we show that sourcing location choices are indeed negatively impacted by institutional differences between home and host country, i.e. ‘distance’ still matters, but they are positively impacted by CMMI standard adoption in host countries, and standard adoption negatively moderates the importance of distance. Findings promote a more contextual, multi-level understanding of institutional antecedents of foreign firm location choices, which also has important policy implications in particular for emerging economies.",
      keywords = "Institutional distance, Organizational field, Industry standards, CMMI, Global sourcing, Outsourcing, Location choices, Multinational enterprises",
      author = "{M{\o}ller Larsen}, Marcus and Stephan Manning",
      year = "2015",
      language = "English",
      note = "null ; Conference date: 11-05-2015 Through 12-05-2015",
      url = "http://kraksfondbyforskning.dk/summary_conference-on-location-decisions-of-multinational-enterprises-markets-cities-or-clusters/",

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      Møller Larsen, M & Manning, S 2015, 'Does Institutional Distance Still Matter? Industry Standards and Global Sourcing Location Choices' Paper presented at, Copenhagen, Denmark, 11/05/2015 - 12/05/2015, .

      Does Institutional Distance Still Matter? Industry Standards and Global Sourcing Location Choices. / Møller Larsen, Marcus; Manning, Stephan.

      2015. Paper presented at Location Decisions of Multinational Enterprises, Copenhagen, Denmark.

      Research output: Contribution to conferencePaperResearch

      TY - CONF

      T1 - Does Institutional Distance Still Matter?

      T2 - Industry Standards and Global Sourcing Location Choices

      AU - Møller Larsen,Marcus

      AU - Manning,Stephan

      PY - 2015

      Y1 - 2015

      N2 - This paper adds nuance to our understanding of institutional antecedents of foreign investment, in particular in global services sourcing. While prior research has stressed the various risks and effects associated with home-host country differences in national-level institutions, e.g. legal systems, we argue that industry-specific, yet often transnational field institutions, e.g. standards, have become critical factors in driving sourcing location decisions. Using data from the Offshoring Research Network, Kaufmann institutional indicators, and data on ‘capability maturity model integration’ (CMMI) process standard adoption, we show that sourcing location choices are indeed negatively impacted by institutional differences between home and host country, i.e. ‘distance’ still matters, but they are positively impacted by CMMI standard adoption in host countries, and standard adoption negatively moderates the importance of distance. Findings promote a more contextual, multi-level understanding of institutional antecedents of foreign firm location choices, which also has important policy implications in particular for emerging economies.

      AB - This paper adds nuance to our understanding of institutional antecedents of foreign investment, in particular in global services sourcing. While prior research has stressed the various risks and effects associated with home-host country differences in national-level institutions, e.g. legal systems, we argue that industry-specific, yet often transnational field institutions, e.g. standards, have become critical factors in driving sourcing location decisions. Using data from the Offshoring Research Network, Kaufmann institutional indicators, and data on ‘capability maturity model integration’ (CMMI) process standard adoption, we show that sourcing location choices are indeed negatively impacted by institutional differences between home and host country, i.e. ‘distance’ still matters, but they are positively impacted by CMMI standard adoption in host countries, and standard adoption negatively moderates the importance of distance. Findings promote a more contextual, multi-level understanding of institutional antecedents of foreign firm location choices, which also has important policy implications in particular for emerging economies.

      KW - Institutional distance

      KW - Organizational field

      KW - Industry standards

      KW - CMMI

      KW - Global sourcing

      KW - Outsourcing

      KW - Location choices

      KW - Multinational enterprises

      M3 - Paper

      ER -

      Møller Larsen M, Manning S. Does Institutional Distance Still Matter? Industry Standards and Global Sourcing Location Choices. 2015. Paper presented at Location Decisions of Multinational Enterprises, Copenhagen, Denmark.