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Recent Academic Research on People and Strategy
If the last 14 years are prologue to the next 86, this new century will certainly bring global interconnectedness beyond imagination. With that in mind, it is not surprising that business leaders of both large corporations and small companies are looking even more seriously at global expansion as a fertile frontier for growth.
Yet considering where to expand globally is one of the most challenging and critical endeavors for senior executives and HR leaders, particularly when the global frontier is not fully understood and is ^lled with cultural, technological, and industrial unknowns. Selecting the right foreign location for your next international expansion can have immense positive implications. Making the wrong choice can be disastrous, leaving you with an enormous number of ^nancial and human resource problems.
A new research study sheds light on a dynamic that executives may have overlooked when deciding where to expand globally. While the process of internationalization has historically focused on gaining access to tangible assets, more recently companies are "internationalizing" based on gaining access to knowledge. The results of the study reveal an important factor when considering foreign locations, and this factor is at the heart of what good HR executives do well: developing and capitalizing on networks of human knowledge.
In this issue of People & Strategy, we review this new study, which addresses the question of global expansion and the effects of human networks, homelands, and migration. Until now, research studies have not fully examined why there is power in considering human immigration networks relative to making foreign location choices. Exequiel Hernandez of the Wharton School, University of Pennsylvania, recently published his research on how corporations "^nd a home away from home" in the Administrative Science Quarterly1.
The Case of Honda
"In 1959, Honda decided to enter the United States with the goal of selling motorcycles to the broad American market. Given the vast size of the U.S., the choice of where to establish the first subsidiary was crucial to the future success of the enterprise. Ultimately, management selected Los Angeles as the most appropriate location. Economic considerations such as the suitability of the weather for motorcycle use, population growth, and customer purchasing power were important factors in the decision,"...