Geography Reference
In-Depth Information
described in Chapter 6 which have taken place since the advent of the
modern era of globalization commencing in the late 1980s and early
1990s. As we saw in Chapter 7, changes in transport, information and
communications technologies along with transformations of the global
institutional context all mean that commerce today operates within a
fundamentally different set of relationships between firms, knowledge,
technology and geography than in previous periods. The modern rela-
tionships between knowledge acquisition, knowledge transfer and the
transactions costs associated with generating and transferring knowledge
across geographical space, imply that the global economy is in many
ways becoming rather more uneven and more 'spiky', and not flatter and
more even as many popular commentators contend. Following the tax-
onometric arguments developed in Chapter 5, in Chapter 7 we saw that
in today's global economy, these spikes are the most appropriate regions
for many MNE establishments to be located, and in particular for MNE
establishments dealing with high value knowledge-related activities. In
other words, MNE establishments focussed on seeking of specific assets
or strategic assets will be located in these 'spiky' places. In contrast, MNE
resources-seeking establishments will increasingly be located outside of
these spiky expensive locations and in lower cost regions. In terms of their
knowledge, technology and innovation features, the relationships between
an MNE establishment and its immediate locality can reflect either of the
four spatial-industrial typologies discussed in Chapter 5, and the modern
MNE explicitly aims to design these relationships to maximize the value
of the subsidiary's activities to the whole corporation. As such, not only
do MNEs exploit globalization opportunities by increasing the cross-
border geographical dispersal of their establishments, subsidiaries and
affiliates, but also they exploit globalization opportunities by ensuring
better matches between the features of the individual establishments and
the potential resources and/or assets which can be derived, developed and
exploited from their localities. This combined ability to exploit both global
and local dimensions is exactly why MNEs are the key drivers of modern
globalization. Their ability to play this dual role is contingent upon
developing a cross-border corporate control and organizational system,
the inter-establishment logic of which in knowledge-management terms
is akin to the industrial complex model, but which can be tailored to the
knowledge-relations specifics of the local context.
What these arguments point to is the critical importance nowadays of
clear definition of exactly what we mean by the location space L which
MNEs consider in their geographical investment decisions. As we saw in
Chapter 2 in most of international business arguments the location choice
space L has traditionally been interpreted simply in terms of a country,
