Geography Reference
In-Depth Information
in each cluster or region. Yet, as we see there are some elements of each
of these particular cluster frameworks which are mutually exclusive of the
other spatial typologies. Therefore, in order to understand the advantages
to the firm of being located in any particular cluster, it is first necessary
to determine which of the ideal types of industrial cluster, described in
Table 5.1, most accurately reflects the overall characteristics and behav-
iour of the firms in the cluster.
5.4.2
MNEs, Clustering and Spillovers
For our purposes, what is important is to understand how the above
transactions-costs descriptions of spatial types can inform our discussion
of the attractiveness of cluster for MNEs and multiplant domestic enter-
prises (MPDEs). As we have already seen, the central rationale for the
MNE is as a means of internalizing knowledge and information transac-
tions costs within the individual firm, whereas the rationale for industrial
clustering is to internalize knowledge transactions costs within the group
of clustered firms. Therefore, from the transactions-costs discussion here
it becomes clear that to understand the relationships between MNEs
and industrial clusters it is necessary to consider how the organizational
characteristics and objectives of the MPDE and the MNE relate to the
knowledge spillover characteristics and inter-firm behaviour of the other
clustered firms. In order to do this we must reconsider the firm's percep-
tions of the benefits of knowledge spillovers. In particular, we must dis-
tinguish between spillovers which result in knowledge inflows from those
which result in knowledge outflows, and also we must distinguish between
unintentional and intentional knowledge flows.
It is safe to assume that all firms regard knowledge inflows positively,
irrespective of whether they are intentional or unintentional. However, a
firm's perceptions of the benefits of knowledge outflows will depend on
the structure of the industry in which the firm competes and also on the
technology embodied in the industry. This is because unintentional knowl-
edge outflows have both a positive and negative effect on the individual
firm (McCann and Mudambi 2004, 2005). On the one hand, the private
effect of an unintentional knowledge outflow on the owner-originator
firm is a leakage of its valuable intellectual capital, which would be viewed
negatively by the firm (Grindley and Teece 1997). Meanwhile, on the other
hand, the potential positive effect of an unintentional knowledge outflow
is the public good aspect of knowledge (d'Aspremont et al. 1998). Such
outflows can contribute to a virtuous cycle by strengthening the knowl-
edge base of the region and making it a more attractive location for other
knowledge-bearing firms. This, in turn, should generate larger future
