Geography Reference
In-Depth Information
2009). The 'new' economic structures and forms of governance pose major
challenges to the existing explanations of the determinants and effects of
multinational firms' behaviour. In these emerging network structures,
international trade, production and knowledge creation occur both
within
the firm across space and
within
networks, some of which are highly spa-
tially concentrated and some of which largely aspatial.
Such massive, profound and ongoing changes have obviously affected
both the nature and configuration of the OLI advantages, and their inter-
actions. Although such interdependences are very difficult to disentangle
'bilaterally', we argue that the changes in the global institutional and tech-
nological environment have had important repercussions for the balance
of the 'three-legged stool' (Dunning 1998 and 2009b, p. 5). This affects in
particular the centrality of the L and, as a consequence, its interaction with
both O and I advantages.
O advantages have been historically exploited largely via internaliza-
tion (intra-firm networks), or I advantages. Growing multinationality
generates per se new O advantages through experience and capability
accumulation, which can then be exploited by both internal and external
means (Castellani and Zanfei 2004, 2006), giving rise to a positive cumu-
lative causation mechanism of the reinforcement of such advantages. On
the other hand, recent evolutionary views of technological change applied
to MNE behaviour and strategy have contemplated the interactions
between O and L, providing grounds for some significant advances in
the field, at least in terms of our empirical understanding. As we will see,
O advantages are increasingly reliant on the ability to explore and select
among a wide range of knowledge and quality sources (e.g., Arora and
Gambardella 1995, Cantwell and Piscitello 1999). Such mostly intangible
L advantages are highly localized and concentrated within specific loca-
tions, and contribute to enhancing firm-specific O advantages, which in
turn strengthen those of the home and host location at the same time. It is
important to note that when competitive advantages are seen through the
lens of economic geography and thus are perceived as both firm-specific
and region-specific competitive advantages, the effects of the presence of
MNEs is much less constrained or conditioned by the traditional host
country-home country dichotomy, because the sources of knowledge
and the overall openness of the host economy in terms of the inflows and
outflows of knowledge resources, become much more relevant issues.
Similarly, as seen above, another focus has been on local spillovers coming
from a local multinational presence. The widespread lack of any direct
observation of spillovers, allied with only a fuzzy notion of the L which is
generally conceived primarily in terms of national borders (e.g., Dunning
1981, 1988a; Blomstrom 1989b, c; Ozawa 1992; Kokko 1992a; Lall 1993a),
