Geography Reference
In-Depth Information
are increasingly able to locate the former type of affiliate in the 'plains' and
the latter type of affiliates in the peaks. Today's MNEs are therefore able
to better match the production and knowledge characteristics of the indi-
vidual subsidiary establishment to the knowledge and cost features of the
specific location than at any time in the past. As such, modern MNEs have
been able to take advantage of globalization not only via a general increase
in the possibilities of corporate dispersal across countries in order to exploit
factor price differences (resource seeking), but also via more accurate and
appropriate subsidiary locational behaviour within individual cities and
regions (specific asset and strategic asset seeking).
Increased geographical dispersal possibilities may also be associated
with some of the old social networks which are based on very long-
standing relationships. Examples here might include the outsourcing
and offshoring of Italian leather goods, textiles, and ceramics industry
activities to countries such as Romania. In this case, the outsourcing is
often to particular regions with long-standing cultural connections to the
origin region. New clusters of subsidiaries emerge in these destination
regions facilitated by spatial transactions between the parent region and
the destination region which are characterized primarily by the industrial
complex types of cross-border control systems typical of multinationals.
Whether the in-migration of MNE subsidiaries and affiliates into a devel-
oping region triggers the long run development of a local spatial industrial
system more typical of an agglomeration, a complex, a new social network
or a new social network or an old social network, depends on the various
issues discussed in this topic, Indeed, this issue regarding the broader
structural and behavioural impacts on local host regions of the technol-
ogy transfer possibilities afforded by MNE relocation, outsourcing and
offshoring, is a much broader issue in general for developing economies,
and these issues will be examined in Chapter 8. However, as already
explained, the transactions costs features of the cross-border intra-MNE
relationships will always operate under the very tight organizational O
and knowledge-internalization I arrangements typical of the industrial
complex, irrespective of the specific arrangements between the affiliate
and its locality.
7.5
THE ROLE OF GLOBAL CITIES
The arguments above imply that falls in particular types of spatial trans-
actions costs provide MNEs with greater possibilities for sophisticated
cross-border control systems than at any time in the past. As we have seen,
the corporate organizational logic of these cross-border control systems
