What is the Wind Behind the Sails to Go Abroad? Empirical Evidence from the Mutual Fund Industry

Specific industry factors determining cross-border business set-up in the European mutual fund industry are analyzed to contribute to the understanding of production specificities in the financial industry. The findings indicate that the decision on where to domicile a fund is not primarily driven by traditional cost factors, such as registration charges and labor costs. Network conditions with respect to the knowledge-based production process of mutual funds and the interaction with regulating authorities such as the approval process embedded in the legal framework and the quality of the workforce in a dense specialized cluster matter most. Differences in such network conditions may allow fund companies to set up more innovative and complex funds in a shorter period of time in one country than in other countries. The findings highlight also that the practitioners agree on such network determinants as being most important