Confidence in learning: Inter‐ and intraorganizational learning in foreign market entry decisions

Abstract

From an organizational learning perspective, we argue that the information signaled by the distribution attributes of foreign investors already operating in a location will influence the entry decisions of later arrivals by affecting their level of confidence in imitating. In the context of foreign investment decisions, the proportion of experienced firms in a location was shown to first increase a follower firm's confidence about imitating them, but then to decrease it, due to anticipated competition. The impact of learning from target organizations also varies with the experience of the learning organization. Data on the location choices of 7,478 manufacturing ventures in C hina by U.S. firms supported the hypotheses. The results provide a more integrated and nuanced understanding of learning in foreign direct investment . Copyright © 2014 John Wiley & Sons, Ltd.