Geography Reference
In-Depth Information
mies, and the international business literature, which concentrates mainly
on the business firm, treat geography and space at a highly stylized and
unspecific macro level. This is typically that of the country, if not even
a macro-region or in some cases a continent. Geography is therefore
intended as an 'international geography' rather than as a 'subnational
space' (McCann and Mudambi 2004). The general lack of locational fea-
tures of such theories in isolation would appear to be harder to justify in
the eclectic framework offered by the OLI paradigm, where the interest in
explaining comparative advantages through ownership and organization
would make the question of
where
MNEs internationalize their activities
in principle inseparable from the questions of
why
and
how
. Locational
choices, that are prerogatives of firms and other agents and not of coun-
tries, are by definition part of wider strategies that underlie both the com-
parative and competitive advantages of firms.
From a conceptual viewpoint, some attempts have been made in
order to explicitly incorporate location within the international business
and management literature, and these are most notably associated with
Michael Porter's (1990) work on clusters. However, Porter's most famous
and valuable contribution is still about the O-type advantages. The four
central determinants of competitive advantage, namely: factor conditions;
demand conditions; related and supporting industries; and firm strategy,
structure, and rivalry - are all properties of the home base, and particularly
the nation-base, of the firm. Yet, by leaving aside proper economic geog-
raphy perspectives, such attempts have failed to discuss the sub-national
regional location behaviour of MNEs with respect to anything more than
the very simplest - and aspatial - Porter's notions of industrial clustering.
The absence of any 'real' geography in the international business lit-
erature ironically therefore parallels the criticisms made by international
business scholars of both new trade theories and NEG with respect to their
largely abstract treatment of space (see Dunning 1998; Ietto-Gillies 2002,
2005; Buckley and Ghauri 2004). Such criticisms are to be taken as a first
step to acknowledge and address the issue of location in the established
explanations of MNEs activities. Yet, NEG has demonstrated the critical
tensions which exist between cores and peripheries and revived the aca-
demic interest in the atavistic contrast between central and more marginal
regions, and the role which firm location plays in these tensions.
In spite of the criticisms attracted over time, the work of both Hymer
and Vernon has been considered seminal in the analysis of MNEs for two
reasons. Firstly, they both introduce market imperfections and dynamic
elements into the analysis, such as changes in demand structures, innova-
tion and technological advantages and information lags. Secondly, they
both recognize the importance of ownership comparative advantages in
