How Imprints Transcend Era and Terra: A Study of Firms' Controversial History and Present-Day Foreign Market Entry

Abstract

How do certain historical events transcend generational and geographic boundaries to shape firm strategy? We explore this question by examining how certain German firms' present-day foreign market entry is influenced by their past leaders' support of Hitler and the Nazi Party, or Nazi imprint. We argue that this imprint persists through two mechanisms: (1) internal organizational alertness to their controversial past and (2) external collective memory sustained by Jewish communities worldwide. When Nazi-imprinted German firms consider entering locations where their past might provoke controversy, they tend to seek informational cues from peers with the same imprint. This results in a positive relationship between the number of subsidiaries their peers have in such controversial locations and the number of new subsidiaries established by the focal firm. To illustrate these mechanisms, we argue that the communist purge in the former East Germany has reduced organizational alertness to the controversial past and thus weakened the relationship. In contrast, commemorative efforts by synagogues around the world have strengthened the collective memory, thereby reinforcing the relationship. We employ two longitudinal samples to test these hypotheses, focusing on German firms' entries into (1) non-German cities worldwide with significant Jewish populations and (2) US counties with neo-Nazi hate groups. We obtain robust evidence supporting our hypotheses. By demonstrating the role of extra-organizational carriers in maintaining historical imprints and challenging the notion that inertia alone sustains them, our research advances imprinting theory and sheds light on the role of history in international business.