Efficiency‐Seeking Emerging Market Firms: Resources and Location Choices

We study the efficiency‐seeking location choices of Indian software firms. In particular, we investigate the influence of heterogeneity in their resources on their location choices. The resource‐based view posits that firms face difficulties in transferring their resources in dissimilar host‐country environments. Prior research has investigated this phenomenon primarily for market‐seeking motives of multinational firms. With the help of hierarchical linear modeling, we analyze 650 location choices of Indian software firms and find that efficiency‐seeking firms face difficulties in locating in host countries with dissimilar and challenging labor environments. We find that the firms with core competence manifested through capability maturity model integration (CMMI) accreditation are able to overcome issues related to resource fungibility in dissimilar host‐country environments. © 2014 Wiley Periodicals, Inc.