Geography Reference
In-Depth Information
This topic, however, has offered ways forward for thinking about these
issues by integrating various existing theoretical arguments with existing
empirical evidence in a manner which has never been done before. From
this perspective the taxonomy developed in Chapter 5 is very instructive.
We know that the motives why multinational firms may locate facilities or
establishments in different locations characterized by any of the typologies
discussed in Chapter 5 can be for any of the reasons outlined in Chapter
2, including seeking assets, seeking resources and general assets (low cost
land and labour), seeking efficiencies (global value chain efficiencies or
scale and scope economy efficiencies), or seeking markets. However,
the focus of our topic has been very much on the modern importance
of MNEs as being specific asset seekers or strategic asset seekers. If we
recall, specific asset seekers are MNEs which are prompted to establish
affiliates abroad specifically in response to the need to acquire particu-
lar technological capabilities, management and marketing expertise or
organizational skills. Somewhat differently, strategic asset seekers are
MNEs which are prompted to engage in foreign operations usually by
acquiring the assets of foreign firms, thereby increasing their O advantages
and reducing those of their competitors so as to advancing their long-term
strategic objectives in terms of global capabilities and competitiveness. We
obviously acknowledge that all of the multinational seeking motives listed
above are associated with location decisions and considerations of eco-
nomic geography. However, the argument in this topic has been that in the
modern era of globalization there are two motivations for multinational
behaviour which are dominant, namely those of specific asset seeking and
strategic asset seeking. We argue that these two motives are nowadays of
paramount importance, because of the unprecedented global returns to
knowledge which are available to MNEs.
Interpreting multinational location behaviour from this standpoint, we
know from Chapters 3 and 5 that knowledge-related transactions costs
are involved in MNE location decisions in two distinct senses: namely,
in
searching
for investment locations and also in
maintaining
an ongoing
presence in a location. Both of these dimensions are critical for MNE loca-
tion decisions and the knowledge-related transactions costs involved may
differ between the two dimensions. In particular, MNEs may locate in
any of the different types of regions classified according to the typologies
discussed in Chapter 5, subject to each of the organizational, knowledge
spillover and contractual issues examined in Chapter 5. However, once an
MNE is located in a region, the knowledge, information and ultimately
the monetary transmission mechanisms linking an MNE establishment
with other MNE establishments around the world, including those of
other companies, are all mediated via formal corporate channels. In
