Geography Reference
In-Depth Information
will largely mirror the spatial industrial logic of the industrial complex.
These improved control possibilities in turn better allow MNEs to make
more accurate subsidiary or affiliate location or acquisition choices,
whose knowledge-transactions characteristics with the local region will
be most appropriately tailored to the local context so as to maximize
the knowledge-related benefits. On the one hand, the integration proc-
esses taking place between larger groups of both rich and also emerging
economies clearly offer greater rewards to MNEs than ever before from
exploiting these possibilities for better affiliate-regional location matching
as well as coordination between dispersed subsidiaries. At the same time,
the higher modern demands for timeliness, the greater requirements for
higher frequency transactions, and the increased preferences for customi-
zation and variety, all tend to increase the distance costs associated with
knowledge-related transactions (McCann 2007,) and thereby increase the
opportunity costs of sub-optimal MNE affiliate locations.
These observations all lead to an additional set of questions regarding
what exactly is the role of scale in economic geography and also in the
design of MNE locational decisions. As we saw in Chapter 2 international
business arguments typically phrased location L decisions at the level of
a country, whereas as we saw in Chapter 3 economic geography argu-
ments phrased location decisions at specific places within countries. More
recent new economic geography thinking emphasizes the role of home
market effects, irrespective of whether or not they cross national borders.
However, the knowledge, technology and innovation arguments in this
topic imply that geographical specificity is becoming more important than
ever for MNEs in terms of their corporate investment strategies. However,
exactly what we mean by locational or geographical specificity is as yet
not clear. In terms of MNE strategies, is the scale of a city-region more
important than the scale of a country, or is the scale of a supra-national
area of integration more important than the scale of a country or city-
region, or is the scale of a country's firms actually more important than
the scale of the market? In order to answer these questions it is necessary
to combine different strands of arguments. Chapters 4 and 5 in this topic
have discussed in detail different aspects of the importance of knowledge
for location behaviour; Chapter 5 in particular examined the knowledge,
technology and innovation capabilities of firms and MNEs and used these
insights to develop the knowledge taxonomy of firm-geography interac-
tions. Combining these arguments with the insights of the present chapter
suggests that certain super-regions and the city-regions contained therein
ought to play an increasing role in the global economy. This is the issue
which we turn to here.
