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Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited
Aspects of location and the regional MNE
Article Type: Letter from the Editor From: Multinational Business Review, Volume 20, Issue 1
Several papers in this issue address the country (location) factor, which along with firm factors, largely drive analysis in the field of international business. In particular, the paper by Narula and Santangelo offers fascinating insights into the nature of location advantages. Essentially, internalisation theory addresses how location factors in the home (and host) country can be aligned with firm-specific advantages to explain MNE performance. It has never been assumed that country-specific (location) advantages are public goods freely available to MNEs. Instead, Dunning’s OLI framework focuses upon the interaction of these variables, demonstrating that L advantages need to be internalised into O advantages to become firm-specific advantages.
Narula and Santangelo examine the nature of the L and O interaction and link this to a modern explanation of innovation (R&D) within the MNE. Their main contribution is to clearly explain the importance of collocation for MNEs in general, and the R&D function in particular. Similar insights about recombinations and the bundling of MNE assets (such as R&D) with host country L advantages have been made by Hennart in JIBS (2009) and in his more recent papers. At MBR we welcome further discussion of such key theoretical advances in the field.
Other papers in this issue also explore the linkages between location factors and MNEs. In one of the first papers to analyse the Arab Spring, Mamoun Benmamoun and his co-authors examine the role of social media and modern information technology (developed by MNEs such as Vodafone) in facilitating a virtual public sphere. These interactions led to the massive changes in government in North Africa and further pressures for change in the Middle East. At MBR we are pleased to facilitate discussion of the application of such modern international business thinking to major current events such as the Arab Spring.
The paper by Hadi S. Alhorr and his co-authors takes a more traditional approach to location by examining the manner in which the EU experiment in regional economic (and political) integration affects the pattern and structure of international strategic alliances (ISAs). This paper addresses something of a neglected dimension in the regional area with its focus on ISAs. Typically, research papers address the interaction between location factors and firm factors, where the latter suggest that MNEs are regional, rather than global. It is important to supplement this work with a specific focus on ISAs, as these are different from MNEs. However, even with ISAs Alhorr et al. find a strong regional (triad) effect, a common finding in recent papers in MBR.
The fourth paper in this issue, by Wolf, Egelhoff and Dunemann, offers fresh insight into the regional nature of the world’s large MNEs. A convincing argument is developed to show that home-region orientation of MNEs is not simply due to economic factors, but requires an understanding of other cognate areas. These include explanations from new regionalism, new economic geography, the knowledge economy, psychic distance theory, escalating commitment theory, population ecology, and neoinstitutional theory. At MBR we welcome the extension of economic explanations of the regional nature of MNEs to accommodate psychological and sociological theories. We welcome comments on this and any other papers. With this in mind, we are pleased to publish a short comment by Ziyi Wei on the recent paper by Mike Peng and others, examining China’s outward FDI and the social responsibility of IB scholars. We also include a detailed book review by Saliya Jayaratne, which offers insight into an important book on MNEs in emerging markets.
Alan M. RugmanEditor-in-Chief