Cultural and political embeddedness, foreign investment in transforming economies

Abstract

The article draws on the concepts of cultural and political embeddedness to analyse the local embeddedness of a global transnational engineering in transforming economies. It compares the process of the negotiations for and the acquisitions of assets undertaken by ABB in Wroclaw, Poland and Xiamen, China. With reference to political embeddedness, while the firm has a strong espoused business culture, the relative strength and autonomy of local institutions in Wroclaw and Xiamen implied different corporate strategies for entry and acquisition. The cultural embeddedness of ABB meant that there were strong similarities in Xiamen and Wroclaw in terms of transferring the norms and routines of the firm. Taking a longer-term view what may appear to be contrasting approaches could be viewed as the same strategy working under more severe institutional constraints, which ultimately slows the pace of acquisition and control rather than fundamentally changing its nature