The Role of Top Management Team in Oversea Location Choice: Evidence from Chinese Firms’ Investments in European Industrial Clusters

Abstract

This article investigates the role of firm's top management team (TMT) in its location strategy in oversea investment decision. From the perspective of the upper-echelon theory and knowledge-based view, we study how knowledge-related characteristics of TMTs, such as education background, foreign experience and R&D experience affect the firm's oversea location choice to invest in an industrial cluster. Using data of OFDI cases from Chinese firms to European sub-national regions from 2006 to 2016, we find that: (1) TMT's education background has a positive effect on firm's OFDI decision in industrial clusters; (2) TMT's foreign experience has a positive effect on firm's OFDI decision in industrial clusters; (3) TMT's R&D background increases the firm's likelihood to invest in industrial clusters. Our findings provide implications related to the effects of TMT characteristics on emerging market firms' oversea investment activities.

Equity ownership structure and internationalization of firms: the role of international experience of board chairs

“…Foreign work experience and nationality of top management teams are found to contribute to the effectiveness of international R&D in a study by Belderbos et al (2020). Education background and foreign experience of executives also affect a firm’s internationalization process (Datta and Rajagopalan, 1998; Lee and Park, 2006) and the choice of foreign investment locations in industrial clusters (Zhou et al , 2021). The study of Dauth et al (2017) on internationalization of top management measures international experience by four measures: nationality; international work experience; international education; and international board appointments. …”