Geography Reference
In-Depth Information
transactions costs of undertaking these standardized and routinized activi-
ties across geographical space are often observed to be falling, and these
falls spur even greater dispersion tendencies on the part of the industrial
complex spatial-organizational forms. As we also discussed in Chapter 5,
in terms of the transactions costs characteristics of the inter-establishment
relationships within the confines of the parent corporate boundaries,
MPDEs, and particularly MNEs, are the clearest example of the indus-
trial complex spatial-organizational structure. The relationships between
the MNEs establishments located in different regions are standardized,
defined, predictable and tightly controlled via an industrial complex type
of logic. As such, falls in these transactions costs between MNE establish-
ments accounts for much of the enormous spatial dispersion of MNE
establishments over recent decades.
If the local knowledge and relational characteristics of the MNE subsid-
iary or affiliates are of the industrial complex type, then the combination
of these along with an industrial complex spatial-organization structure
within the overall MNE corporate hierarchy implies that increasing
numbers of individual MNE affiliates will be located in the 'plains' in
Figure 7.2 above, where production costs are low. This is exactly in
accordance with the logic of the Weber (1909) and logistics-costs models
(McCann 1993, 1997) discussed in Chapter 3. In contrast, if the spatial
transactions costs associated with many knowledge activities are increas-
ing, and as such more subsidiary or affiliate decision-making autonomy
becomes advantageous, the relationships between multinational affiliates
and their individual immediate localities will increasingly exhibit relational
characteristics which are more typical of either the pure agglomeration or
the social network models than the industrial complex model. Given that
the MNE corporate hierarchy will still exhibit the spatial-organizational
features of an industrial complex, in terms of Figure 7.2 above, this implies
that MNE subsidiaries and affiliates undertaking knowledge activities will
increasingly be located in the spikes, or the peaks. This largely accounts
for the increasing sub-national regional specificity of the location behav-
iour of many MNE affiliates.
Many modern multinational have affiliates and subsidiaries which
undertake quite different activities and roles, whereby some affiliates deal
with standardized activities whose relationships can best be described by
the transactions costs features of an industrial complex model, while others
undertake knowledge-intensive activities whose relations are best captured
by the agglomeration or the various social network models. Given that the
spatial transactions costs exhibited by the industrial complex model have
systematically fallen in many cases, thereby permitting ever-tighter MNE
corporate control systems, in terms of Figure 7.2, the result is that MNEs
