172 l REGIONAL INVESTMENT PIONEERS IN SOUTH ASIA
Although data issues prevent a corresponding study from being undertaken of the evolution from the first investment type to other types of investment, case study evidence points to a gradual path.15 In addition to the case of Soorty Enterprises’s gradual path, discussed in chapter 3, MAS Brands originally started with a distribution investment in Bengaluru in 2007 to facilitate sales of its intimate wear in department stores, and eight years later it opened up its own retail store. However, as firms expand overseas, they may take different approaches to different markets. For example, MAS Brands expanded to Maldives with a direct retail investment, but it chose a franchise agreement for Pakistan.
Bridges of Knowledge: Key Channels of Awareness of Investment Opportunities Having established the importance of knowledge connectivity for investment entry, understanding the key sources of information on which investors and potential investors rely is important, with a view to understanding the most appropriate way to address information barriers. These information sources should be targeted to enhance knowledge connectivity for potential investors. Three broad channels of information are identified in the survey: an investor demonstration effect, an informal network effect, and an institution-based effect. Giving a score of one to a broad channel if at least one of its component options was chosen by a firm, and zero otherwise, suggests that all broad channels are important, with the investor demonstration effect leading (accounting for 35 percent of all sources), just ahead of the network information effect (33 percent) and institution-based information flows (32 percent). Business networks, the demonstration effect of national and global competitors, business travel, and matchmaking events are the main sources of awareness about investment opportunities (figure 4.10). Figure 4.10 also reveals the channels that are reported to be of low importance, including ethnic networks, South Asia Region trading relationships, and the activities of foreign investment promotion agencies and embassies in home countries. The result for ethnic networks is a typical response from entrepreneurs when asked directly about the importance of ethnic networks (as by Gomez-Mera et al. 2015). Perhaps psychological aspects, or their “bundling” of this issue with business networks, leads them to downplay this aspect. Figure 4.11 presents differences in information channels between large country investors and other investors, and investors that are active outside the region and those that currently do not invest. For investors in South Asia, the top three factors in each broad channel of information are investor demonstration effects from a national competitor or global competitor, or business group entry demonstration effects; informal network effects from business contacts, business travel, and tourist travel; and institutional sources at matchmaking events, unpaid media reports, and industry meetings
