Making Embeddedness Work: Social Practice Institutions in Foreign Consulting Markets

Johannes Glückler
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Johannes Glückler: Institute for Economic and Social Geography, University of Frankfurt, Dantestrasse 9, 60325 Frankfurt am Main, Germany

Environment and Planning A, 2005, vol. 37, issue 10, 1727-1750

Abstract: This paper develops conceptual and empirical evidence for the importance of social practice institutions in the internationalisation process of management-consulting firms. Personal trust and reputation rather than price are examined as key mechanisms of foreign market entry and penetration. Empirical case studies in London, Frankfurt, and Madrid produce three findings. First, enduring client relations and client referrals facilitated most foreign firm entries and the majority of local client acquisition. Second, interview findings imply a critical assessment and reconceptualisation of trust and reputation. Empirically, goodwill trust and networked reputation are substantiated as particularly important transaction mechanisms. Third, a triangulation of interview and survey data reveals a causal relation between trust and reputation that enhanced a cumulative growth of social networks within the new host markets. This research points to the importance of social practice institutions for economic organisation and exchange across geographic distance.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envira:v:37:y:2005:i:10:p:1727-1750

DOI: 10.1068/a3727

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