51 Flavors: Regional Resource Configurations and Foreign Multinational Market Entry in the U.S. Biopharmaceutical Industry

Abstract

Creating a sustainable regional economy requires not only attracting new local ventures, but also foreign multinationals. In this regard, understanding which resources are influential in market entry decisions is crucial given that there are different resource needs between developed (DMNE) and emerging market (EMNE) multinationals. Answering calls for more neo-configurational studies in the literature, our study uses a fuzzy-set qualitative comparative analysis (fsQCA) approach to examine foreign multinational entry decisions in 51 regions of the U.S. We constructed a novel dataset comprised of 3287 foreign firms from 61 countries and territories operating in the biopharmaceutical industry. We find that there are substantial differences in the configuration of resources that attract DMNEs and EMNEs to regions. The resource configurations in our models account for over 80% of the factors influencing DMNE and EMNE market entry location decisions. Some resources played a more important role in these decisions, such as FDI stocks, cluster size, and manufacturing intensity. Our findings show that EMNEs seek out regions with a greater abundance of different resources than DMNEs. This study provides practical implications for firms entering foreign markets as well as for policy makers who want to attract these firms to bolster their regional economic development.