Firm networks and Korean subsidiaries in the United States

Abstract

This article examines the role of intra-, inter-, and extra-firm networks in influencing the location and investment of Korean firms and their subsidiaries in the U.S. Based on a survey of Korean subsidiaries in the U.S. in 2004, this article finds that inter-firm relations with customers and suppliers, as well as intra-firm relations in the form of parent firms' knowledge of the U.S. play an important role in locational decision. Korean subsidiaries' relationships with U.S. places are strongly influenced by home-based practices that favor hierarchical intra-firm organization and embedded sociopolitical extra-firm relationships that emphasize blood, school, and regional ties. Location in U.S. industrial clusters does not increase Korean subsidiaries' level of autonomy from parent firm's control that could help facilitate the sourcing of local knowledge and resources. Only improved intra-firm network positionality positively contributes to increased subsidiary autonomy. Overall, the findings indicate that while inter-firm relations may be important in locational selection among Korean firms, network norms are largely maintained through intra-firm and, to a lesser extent, extra-firm relations. © 2007 Blackwell Publishing.