2 management - School of International Business and ...

139 The Puzzle of Globalization
asset/access-seeking FDIs are instruments that allow combining globalization and localization, thus
adapting to cultural differences. Empirical studies suggest that informal cultural distance is nega-
tively related to the amount of foreign multinational activities in countries. MNCs are able to reduce
the impact of this type of distance on their performance more successfully than the impact of formal
governance deficiencies [Slangen and Beugelsdijk, 2010]. Localization of globally acting MNCs
contributes significantly to the generation of more sales abroad than at home.
Cultures can be interpreted as networks that are characterized by high internal interactions and/
or special forms of communication relative to external interactions [Granovetter, 1985]. The in-
novativeness of the network economy »Silicon Valley«can be attributed to the intensive com-
munication among the relevant actors which creates a very special regional culture [Heiduk/
Pohl, 2002]. The relevance of cross-border ethnic networks as determinants of the volume and
direction of international trade has been analyzed in numerous empirical studies. Studies on eth-
nic Chinese networks show their »quantitatively important impact on bilateral trade through the
mechanisms of market information and matching and referral services, in addition to their effect
through community enforcement of sanctions that deter opportunistic behavior«[Rauch/Trindade,
2002, p 129].
It is to be expected that the internet has created a global market place where cultural barriers
disappear. But the reality looks differently: Consumers obviously do not act globally when buying
via the internet. Despite the fact that the internet is the fastest growing retail channel, the gap
between domestic and cross-border e-commerce is widening [Commission of the European Com-
munities, 2009]. Besides the technical bottleneck of offering adequate means of cross-border
payment, language problems are still hindering the expansion of internet shopping.
2.3 TECHNOLOGY, CLUSTERS AND MIGRATION
Technology, formerly considered the most important asset that creates firm-specific competitive
advantages, is globalizing rapidly. Besides the shortening of the duration of patents, the absence
of intellectual property rights laws or quite simply the shortened technological life cycles more and
more MNCs cooperate formally (e.g. via joint ventures) or informally (e.g. via spillover effects) in
R&D. The two models that can be observed are:
– joining already existing clusters abroad and transferring knowledge internationally,
– attaching R&D facilities to the internationally fragmented value chain.
The first model focuses on benefiting from the centripetal driving forces of clusters such as Silicon
Valley, Bangalore, Boston Life Cycle Cluster, BioValley (border France, Germany, Switzerland).
Clusters attract foreign enterprises to invest in these regions in order to participate and con-
tribute to the technological innovation. R&D subsidiaries, research-oriented joint ventures and