Geography Reference
In-Depth Information
Institutional and technological environments have changed radically
since the late 1980s, and multinational corporations, the supposedly inflex-
ible dinosaurs, have changed accordingly, and to a much larger extent
and rather more quickly than many other types of firms. The modes of
international investment, the organization and management of intra-firm
vertical and horizontal relationships, the types of affiliation linkages, the
diversification and distribution of functions, the integration of subsidiary
objectives into the overall goals and strategy of the MNE, have all gone
through substantial and rapid changes. These new organizational modes
have occurred within MNEs, and are also seen in terms of their external
relationships. Increasingly complex and systemic forms of integration of
international operations have involved external firms, often SMEs, which
are connected through contractual relations (outsourcing) to the global
production networks led by large corporations. Also, the growing degree
of complexity in MNE forms and organization has made clear that the
boundaries and definitions of multiproduct and multi-technology MNEs
with respect to individual industrial sectors and technological fields are
increasingly blurred.
As we argue in later chapters, the identification of the MNE's spatial
location, and its characteristics with respect to geography, industry struc-
ture, knowledge and technology flows, is a result of complex interactions
between firm, industry, organizational and knowledge characteristics.
The simple host-home country dichotomy becomes insufficient. This is
particularly so in the developed parts of the world, where host and home
may actually overlap to a great extent, and where the locations which are
host to a major presence of MNEs are also those which are most generally
connected by outward linkages. The location of corporate headquarters
of large MNEs nowadays has little geographical connection with the loca-
tion base for specific business units and operations. An MNE's multiple
locations are best understood as a specific sub-national area - a region,
city or industrial cluster - where a firm locates its core functions, includ-
ing strategic decision-making, research and development, and often some
core manufacturing or services activities. Each function (or activity) of an
MNE tends to favour different spatial characteristics. Yet, opposing this
dispersion force are vertical linkages between stages of production which
can encourage firms to co-locate different activities in the same location
(Defever 2006).
Flows, and particularly flows of knowledge, are increasingly under-
stood as being bi-directional or multi-directional, with concepts such as
'openness' and 'connectivity' coming to replace terms such as 'inward' and
'outward' flows. At the same time, the stable relationship between owner-
ship and control, which has long been understood as being problematic
