New institutionalism in sociology addresses how institutional pressure influences organisational behaviour. Its particular impact on “new economic sociology” is to establish a counter perspective to neo-classical economics by criticising the rational actor model of behaviour and emphasising cultural and cognitive references for business actions. Recent developments in new institutionalism increasingly focus on researching national and international contexts, which demonstrate a keen interest in non-local environments. Micro sociological research accordingly receives limited attention and the meaning of locality for production strategy in relation to markets is largely neglected. This thesis presents evidence from the kitchen-furniture industry of East Westphalia and Lippe (EWL) in Germany that, in an increasingly globalised economic system, local institutional contexts continue to influence business behaviour significantly. The thesis demonstrates the importance of locality for production organisation and business strategy in this case. The research aims to contribute to new institutionalist theory by establishing the relevance of “localness” and to encourage research to re-engage in meso-analysis on the sub-national level. The analysis presents results from a qualitative case study, which encompasses in-depth interviews, as well as results derived from contextual analysis of the industry’s structure and performance and statistical indicators provided by local institutions. The study tries to understand why about 70% of German produced kitchens, and about every fourth kitchen in Europe, originates from EWL. The findings demonstrate that managers’ evaluations of local production networks, regional cultural norms and values, shape managerial cognitive frameworks, which influence business behaviour significantly and can create meaning for locality of production sites.