Geography Reference
In-Depth Information
for a stronger L, can be substantially enhanced by bringing closer together
already existing theories and explanations of the firm and its environment.
We have learnt from location theories various ways of representing the
fact that multinational firms are complex multiplant firms which operate
in a range of different economic environments, depending on their loca-
tion strategies. While these organizations are far more complex than
the simple representative firm models employed in microeconomics, the
arguments in this topic suggest that a range of theoretical models of firm
location behaviour could help gain insights into many aspects of such
choices. Models of spatial profit and cost variations, spatial competition,
geographical and product space, leader-follower and clustering behaviour,
all allow us to gain particular understandings of the complex multidimen-
sional nature of the relationship between geography and MNEs, and in
particular, between geography and large MNEs.
As is clear, a firm's ability to generate profits depends on its com-
petitiveness in its markets and this in turn depends on its ability to inno-
vate and grow, and on the knowledge it can create, acquire and utilize.
However, as we have also pointed out in this topic, the presence of a
multinational firm within a region, either within a 'home' region or a
'host' region or both, also often changes the industrial and competitive
structure of that locality. MNEs are rarely passive participants in regions
and clusters. They are more frequently active agents for local engagement
and change as they provide new avenues for connecting the local context
to outside sources of knowledge and resources. Yet, exactly how the firm's
location strategies relate to these two-way interactions between the firm
and the region also depends on the organizational aspects of the firm, the
nature of the knowledge relations which operate in the local economy,
and the systems, processes and structures which promote local innovation.
Intra-firm, inter-firm and inter-organizational networks that link together
different agents and economic systems are increasingly to be seen as domi-
nant modes for the creation and diffusion of knowledge. Beugelsdijk et al.
(2010) refer to those dimensions and relationships in terms of place, space
and organization.
A productive cross-fertilization of rather disparate, and still mostly
disconnected, theoretical strands may achieve, again in Dunning's words,
an “evenly balanced three-legged stool” (Dunning 1998 and 2009b, p. 5),
thus allowing a full understanding of the L and its interdependence with
the O and I. We hope that the discussions in this topic have provided
some clues as to how these interdependencies might be better understood.
The majority of innovation theories now suggest that corporate dynamic
capabilities are associated with the openness of firms to their external
knowledge environment (Fontana et al. 2006), as well as with their
