| The success of foreign direct investment (FDI) from developing countries such as China to developed countries such as Germany is critically dependent on managing the differences in the knowledge bodies of the regions and players involved. The theories that at least partly explain successful FDI of this kind use the terms distance, cognitive distance, social capital and embeddedness. Most of the empirical research takes the perspective of regions and has addressed the problem of becoming embedded in the host regions. This paper takes the perspective of the firm and looks at cognitive distance not only regarding the host region, but also with respect to the knowledge of the firms involved. It uses qualitative information from an extensive study of Chinese affiliates in Germany. In contrast to many other studies, this paper shows that a fast and successful process of forming social capital and becoming embedded in the host region can effectively hamper the subsidiary's success, as it may cause conflict with the parent firm. |
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| Contact information: |
| Barbara Krug |
Pierre-Olivier Legault Tremblay |
| Email |
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