General and specific social learning mechanisms in foreign investment location choice

We integrate economic and institutional theories of location choice in an overarching social learning conceptualisation. Investors learn about the attractiveness of alternative locations by observing the actions of previous investors (‘models’). We distinguish two types of learning that can occur simultaneously. With assessment learning, investors judge the economic feasibility of investment in a location by observing generic models. With bandwagon learning, firm-level uncertainty prompts the following of specific models over others, with recentness of model behaviour an important moderator. We find broad support for our conceptualization in an analysis of 692 Japanese electronics firms’ entries into Chinese provinces during 1979-2001.status: publishe