Geography Reference
In-Depth Information
urban and regional phenomena. While the primary aim of this chapter is
to bring these MNE knowledge-internalization and organizational issues
to the attention of economic geographers, regional scientists and urban
economists who in general are largely unschooled in these matters, our
secondary aim is also to demonstrate to both international business and
management scholars as well as to economic geographers and regional
economists that many of the theories of MNE behaviour originated from
observations within urban economics. One of the key themes of this topic
is that these original observations from economic geography which subse-
quently were adopted and adapted in international business literature are
still basically valid and as such warrant much further investigation.
Chapter 3 reviews traditional location theory with the aim of high-
lighting the relevance to multiplant and multinational enterprises of very
orthodox and standard approaches to firm location behaviour. We will
consider the relationships between firm location choices, factor costs, and
firm profitability from the perspective of three traditional types of firm
location models, namely the Weber, the Hotelling and the Salop models,
each of which will provide us with different insights into the nature of
firm location strategies. In addition, by looking at leader-follower and
clustering behaviour, and the possible shifts from hierarchical versus het-
erarchical organizational structures in multiplant and multinational firms,
in this chapter we will start to take on board the issues of local knowledge
accessibility, thereby allowing for an extension of the analysis to more
comprehensive and modern-looking
MNE types. The models presented in
this chapter are well-known to economic geographers, regional scientists
and urban economists, but very much less so to international business or
management scholars. While the aim of this chapter is primarily to bring
to the attention of international business and management scholars the
value in applying microeconomic location theory to the spatial behaviour
of multiplant and multinational enterprises, the secondary aim of the
chapter is also to demonstrate to economic geographers and regional sci-
entists the fact that many elements of their standard toolkit are applicable
for analysing the behaviour of firm types which are well outside of their
typical domain.
Taken together, Chapters 2 and 3 are intended to demonstrate that the
international business and management literatures analysing multination-
als and the economic geography and regional science literatures share
far more in common than is typically understood by either literature.
Moreover, the common ground that these literatures all share centres on
the issues of knowledge - and its various manifestations in the form of
technology and innovation - and the treatment of the transactions costs
faced by firms striving to acquire, generate and exploit this knowledge.
