The Location and Performance of Foreign Affiliates in Global Cities

Abstract

We suggest that the entire world may not always be the appropriate frame of reference in analyses of Multinational Enterprises (MNEs) location choices. In some industries and activities, more narrowly defined geographic areas, such as regions and cities, are more relevant level of analyses. Employing global cities as the geographic frame of reference, we extend the theory of the location choices of MNEs by challenging the assumption that location attributes have identical values for all MNEs. Rather, we explicitly acknowledge the relative value of such attributes for individual MNEs, and search for the firm-specific characteristics that affect this variation. The empirical testing is based on analysis of 673 financial and professional service MNEs that entered New York and London via mergers and acquisitions (M&As). The findings confirm that it is the interaction between location and firm-specific attributes, rather than each of these independently, which affects location choices.

Citation

Nachum, L. and Wymbs, C. (2007), "The Location and Performance of Foreign Affiliates in Global Cities", Rugman, A.M. (Ed.) Regional Aspects of Multinationality and Performance (Research in Global Strategic Management, Vol. 13), Emerald Group Publishing Limited, Leeds, pp. 221-259. https://doi.org/10.1016/S1064-4857(07)13010-2