Geography Reference
In-Depth Information
according to the different operations and functions carried out by the
firm. This will allow the depiction of the locational patterns of other types
of MNEs described in Chapter 2: those that are simultaneously investing
to acquire specific technological capabilities, management or organiza-
tional skills (i.e.
specific- asset seeker
s), to
rationalize previous resource- or
market- led investments (i.e.
efficiency seekers
, and in particular
those
termed in Chapter 2 as
scale and scope economies seekers
, or MNEs
looking for rationalization across different institutional settings, market
and industrial structures, and policies, often as a consequence of economic
integration processes), and to enhance long-term strategic objectives rela-
tive to their competitors (i.e.
strategic- asset seekers
).
3.9 CONCLUSIONS
The four types of location analytical frameworks discussed in this chapter,
namely the Weber, the logistics-costs, the Hotelling, and the Salop models,
each provide us with different insights into the nature of firm location
strategies. The Weber model demonstrated how firm location behaviour
can be an evolutionary and iterative process, as firms balance the costs of
spatial transactions against location-specific factor prices in their search
over time for optimal, or at least superior, locations. The insights of the
logistics costs model go further, arguing that the key transactions costs
which firms face are related to time, and in particular the costs of capital
and knowledge-acquisition. This framework naturally leads to a spatial
ordering in which activities which are higher up the value-chain tend to be
located closer to the market whereas those lower down the value chain are
located closer to the supply points. These locational orderings are a result
of the ongoing relationships between the costs of time and the costs of
space, both of which are reflected in the cost of inventory working capital.
For MNEs which operate establishments in numerous locations, these
capital funding costs are critical. In particular, as we have already seen,
in modern globalization a huge share of international transactions are
actually movements of goods and people within individual multinational
corporate structures.
The market area location models of Hotelling and Salop provided us
with spatial competition insights which in some ways are similar to those
generated by the Weber and logistics-costs framework in that firm loca-
tion processes are perceived to be dynamic, whereby firms adjust their
spatial behaviour over time in response to other factors. In the case of the
Bertrand-Hotelling model firms adjust their pricing strategies in a manner
which is optimal for their location, but spatial clustering leads to a col-
