Beyond industrial clusters: subsidiary evaluations of locational externalities in country-of-origin clusters

Location is selected at headquarters, but its value is experienced within subsidiaries. International business research has explained where multinational enterprises locate and what agglomerations offer, yet it tells us much less about how subsidiaries experience inherited locational environments after establishment. We examine this problem in country-of-origin clusters (COCs), where shared national origin creates a distinctive relational environment alongside industry-specific, market-based, and cost-related externalities. Drawing on Spanish and German subsidiaries operating inside and outside COCs in Kunshan, China, and using set-theoretic qualitative comparative analysis, our study reveals that COCs cannot be understood as providing a single, uniform bundle of locational advantages. Instead, their strategic meaning depends on how different externalities become salient within the subsidiary's locational environment. By shifting attention from place-based advantages to subsidiary-perceived externality portfolios, our study offers a configurational account of when country-of-origin clustering becomes strategically meaningful. We further develop a set of propositions that extend these configurational insights and provide a focused agenda for future inquiry.