Does Institutional Theory Explain Foreign Location Choices in Fragmented Industries‪?‬

INTRODUCTION There has been a comprehensive review in the International Business (IB) literature on the behavior of firms in concentrated industries and their expansion across national borders. Beginning with the Harvard Multinational Project in the 1960s, IB scholars such as Raymond Vernon and Frank Knickerbocker posited that oligopolistic industries were prone to make aggressive-defensive moves in order to maintain the equilibrium in the subject industry. As such, and because these firms had a valuable position to protect, the decision for foreign direct investment (FDI) was reactionary for many firms. The focus of these studies was not only industries that had oligopolistic tendencies but that were also involved in manufacturing. This combination of highly concentrated, or oligopolistic, industries and manufacturing concerns was logical for the time since most data that was available to academics were of this sort.