Abstract Based on agglomeration economy theory and institutional theory, this paper takes as samples the foreign subsidiaries operating in China’s manufacturing industry, and adopts system GMM method to empirically test the interaction effect of the subnational economic agglomeration and institutional distance on the liability of foreignness. The results show that the interaction effect of subnational specialized agglomeration and institutional distance have no significant impact on the liability of foreignness. Subnational diversified agglomeration and cultural distance have a significant effect on the liability of foreignness. Subnational diversified agglomeration and regulation distance show no clear influence on liability of foreignness. Neither do subnational diversified agglomeration and economic distance.
2018, Vol. 35 
