Geography Reference
In-Depth Information
tion only came about with the advent of the continuous flow principle,
in which no two products were ever at the same stage of production on a
single production line (Best 1990, 1998).
The development of the mass production system and the managerial
hierarchy required to facilitate this model of production organization in
many ways marks the second major industrial revolution of the modern
era. Yet, these technological and organizational developments not only
transformed production, but also transformed global organizational and
investment possibilities. During the first era of globalization from the
early seventeenth century through to the early twentieth century, large
multiplant corporations operated almost entirely within the confines of
their own national and colonial systems. Many British, French and Dutch
commercial enterprises had multiple facilities and operations scattered
across their respective empires as well as across their home countries.
Similarly, by the second half of the nineteenth century many US firms
were also rapidly expanding facilities and operations across the North
American continent as the US empire spread west (Ferguson 2004). Yet,
up until this period the economic engagement between different countries
and empires was overwhelmingly dominated by exporting and import-
ing operations, rather than by actual direct investment in each other's
economies, which was still very limited by today's standards (Findlay and
O'Rourke 2007). In the latter years of the nineteenth century and the eve
of the twentieth century the growing income per capita of the dominant
powers, which supported a steady expansion of product variety and sub-
stantial technological advances in terms of new products, processes, and
improvements in transportations and communication systems, spurred
both innovation activities and MNE expansions enormously. The extent
of international operations went increasingly beyond simply commercial
exchanges and capital flows embedded in foreign direct investment. The
degree
of multinationality started to extend both in terms of geography -
that is, overcoming the boundaries of colonial empires and involving large
corporations headquartered in a wider number of countries - and also in
terms of functions - that is, involving more complex forms of control and
business association with foreign operations, such as, for example, the
diversification of innovation and technological activities in multiple loca-
tions outside the company's headquarters. The base for firms' long term
profits began to shift away from market growth, trade growth, and capital
accumulation, and became increasingly grounded on technological accu-
mulation and organizational innovations, which gradually transformed
production methods and systems. As highlighted by Schumpeter, such
transformations relied upon the creation of locally specific technological
competencies, embodied in the collective corporate capabilities of the large
