Geography Reference
In-Depth Information
(see also Cantwell 1989; Kogut and Chang 1991; Dunning 1995; Frost
1996; Almeida 1996; Kuemmerle 1999; Cantwell and Janne 1999; Pearce
1999; Zander 1999a, b; Frost 2001; Mudambi 2002) the mechanisms of
these technological linkages have, until recently, tended to be depicted
in terms of intra-firm and inter-firm interactions, while the geographical
space itself has still been treated mostly as an exogenous variable whose
structure and dynamics are hardly explained at all (Rugman and Verbeke
2002). As we shall see in the following chapters, only very recently have
numerous empirical studies been undertaken in the direction of defining
the actual 'space' of MNE innovative activity. This qualitative and quanti-
tative evidence is regarded as an extremely valuable and fruitful extension
of the study of the MNE phenomenon, whose feedbacks have yet to be
incorporated in the wider analytical framework of the OLI.
2.4
THE DETERMINANTS OF MULTINATIONAL
ACTIVITY: I ADVANTAGES
2.4.1
From O to I Advantages
Building on the ground laid by Hymer, Caves and Vernon,
12
further work
in economics explores the ownership advantages of MNEs, addressing
the role which both market imperfections and strategic behaviour play
in the promotion of international production. In terms of the geography
of MNE operations the tradition which follows Hymer and Caves
13
is
similar to that of Vernon and his followers.
14
However, in the discussion of
country-specific ownership advantages the Hymer-inspired literature puts
relatively more emphasis on the relevance of the structural characteristics
of the investor's economy, rather than on Vernon's focus on the strategic
behaviour of oligopolistic players. From a spatial perspective this is an
important point, because in the Hymer-Caves inspired framework the
(macro) locational features of the MNE origin, such as the institutional
and social environment, take on a crucial role as determinants of com-
parative advantages, and thus of multinational expansion. This is quite
different to the Vernon framework which views locational issues in terms
of the strategic responses by firms to product life cycles and market dis-
tortions. However, in each of these theoretical approaches - particularly
during the 1960s and the 1970s - the main objective of the analysis is still
the question of
why
firms become multinationals, with relatively little
attention paid to the question of
how
multinationals organize their activi-
ties across multiple sites. The focus is therefore primarily on ownership
and comparative advantages, on markets and price mechanisms, and thus
