Geography Reference
In-Depth Information
knowledge. Most notably, our discussions in this chapter of the advan-
tages of heterarchical versus hierarchical organizational structures in
multiplant MPDE and multinational MNE firms, allows us to take on
board the importance of local knowledge accessibility in driving location
decisions, and for the first time to begin to re-shape the lines of argument
implicit in the OLI paradigm. In particular, this type of analysis highlights
the links between the location L aspects, the knowledge internalization
I aspects, and the ownership-organizational O aspects embodied in any
multiplant location decision. If we move beyond general asset-seeking or
resource seeking behaviour and instead follow Alchian's (1950) knowledge
evolutionary arguments, we discover an analysis which is particularly per-
tinent to MNEs. These issues relating to the firm's internal and external
sources of knowledge and the ways in which these shape the firm's strat-
egy, have profound implications for the geography of MNEs. These are
the issues we now discuss in more detail in Chapter 4.
NOTES
1. An examination of the insights of these three models is critical in order to allow us to
develop these broader themes. Much of the material in the following sections of this
chapter draws on elements of the analysis contained in McCann (2001), where a more
formal mathematical treatment of these issues can be found than is necessary for our
purposes here.
2. See Section 2.2 in Chapter 2.
3. The idea that a product or service is basically a bundle of characteristics which a con-
sumer will pay according to their preferences and tastes was originally associated with
the ground-breaking consumer theory work of Lancaster (1966, 1971, 1979) and Becker
(1965).
4. Common examples here are automobile showrooms and dealerships, which are often
clustered together on the edge of cities.
5. See Section 2.3.5 in Chapter 2, and also Chapter 4, on the changing role of MNE
subsidiaries.
