Novelty of international locations: the role of TMT faultlines and subgroup level dynamics

Abstract

An extensive body of research in international business (IB) theoretically and empirically examines factors that determine international location decisions of multinational companies (MNCs). Most of this research, however, does not address the heterogeneity observed in the locations choices of MNCs. Specifically, why do some firms make more novel location choices vis-à-vis others? This conceptual paper seeks to answer this question by examining the role of top management team's (TMT) task-related experiences and characteristics in shaping these strategic decisions. Combining insights from upper echelons (UE) and faultlines theories, we develop a framework to explore how TMT level task-related faultlines impact the novelty of international location decisions of MNCs. Moreover, we also examine how power dynamics across subgroups arising from these faultlines influence the relationship between faultline strength and novelty of locations. In doing so, we identify contextual conditions under which TMT level characteristics are especially important for novelty of location choices. Implications for UE, faultlines and location choice theories are discussed.