Geography Reference
In-Depth Information
likewise seen as barriers to homogenization, but the productive opportu-
nities and information flows associated with the death of distance render
political barriers increasingly costly and ultimately unsustainable (Strange
1992). The belief that the characteristic business form of this small and
flat world will be the decentralized and flat stateless network, rather than
the corporate leviathan, therefore also comes from a parallel aspatial
discourse on business organization, in addition to a primarily spatial
discourse. We are, without doubt, in an age of outsourcing, offshoring,
alliances, partnerships, networks, core capabilities and competencies, and
clusters. Organizations which once strove to internalize functions - up
and down the supply chain - now strive to source them. Leanness, agility,
flatness, flexibility, focus, specialization and even virtuality are honoured,
and there is a tradition, exemplified by Michael Piore and Charles Sabel
(1984) and Hirst and Zeitlin (1992) that holds that these new virtues are
best reflected in SMEs. This tradition sees the origins of the large MNE,
which is presumed to be fat, rigid, and otherwise antithetical to the new
virtues, as emerging from sources. One is in inflexible production tech-
nologies which militate against flexible organizational systems, and the
other is in the relatively high costs of organizing production between
firms via market transactions, rather than within firms via administrative
coordination (Williamson 1985). In this view two of the standard claims
are that in a post-mass production world, networks of SMEs have many
inherent advantages over corporate giants in that they are perceived as
being better at innovation and also better able to adjust output levels. The
realization of these advantages depends on the ability to cut transactions
costs. In the 'flat world' vision two sorts of barriers are perceived as having
been removed, namely the barriers to operating at a distance and across
borders, and the transactions costs between firms.
That flat world, of course, is a fiction. One might be tempted to say that
it is a hypothetical idealized state, one that we may never attain but can
hope to glimpse on the far horizon as the barriers of distance, borders,
and transactions costs are reduced by advances in technology. Even this,
though, would be incorrect. At the simplest level, we can say that there
is ample evidence that the removal of barriers to international trade,
investment and communication can actually make geographical proxim-
ity more, rather than less, important. Many economic activities benefit
from co-location, whether for reasons of simple logistics, shared inputs, or
benefits of face-to-face contact (Arita and McCann 2000). When barriers
to cross-border or long-distance trade are reduced, some agglomerations
- local, regional, or even national - may find that their comparative
advantages produces growth. The integrated world becomes a more dif-
ferentiated one, and proximity to places such as Silicon Valley, the City of
