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Article
Publication date: 10 January 2020

Murat Akpinar

This paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing location

1140

Abstract

Purpose

This paper aims to clarify the fit of competitive strategies and firm-specific advantages (FSAs) with country-specific advantages (CSAs) in explaining manufacturing location choices at product category level in the European automotive industry.

Design/methodology/approach

Seven hypotheses are formulated and tested using binomial logistic regression with data from 148 passenger car models (i.e. product category level) that are sold in Europe and manufactured in countries that offer CSAs of either cost advantages or differentiation advantages. The first four hypotheses test manufacturing location choices of product categories pursuing cost leadership strategy, differentiation strategy, focus strategy and hybrid strategy. The other three hypotheses test whether FSAs of R&D capability, marketing capability and operations capability will impact on the manufacturing location choice. The tests control for the type of passenger cars as well as the manufacturer’s region of origin.

Findings

While pursuing cost leadership strategy leads to manufacturing in countries that offer cost advantages, pursuing differentiation strategy as well as strong R&D capability and marketing capability result in manufacturing in countries that offer differentiation advantages. Focus strategy, hybrid strategy and operations capability do not have an impact on the manufacturing location choice at product category level.

Research limitations/implications

Conducting empirical research at product category level is subject to limitations in the choices of FSAs due to lack of availability of data.

Practical implications

Managers should assess the competitive strategies and FSAs of their product categories and then decide about manufacturing locations based on their fit with host country CSAs. Policymakers should understand the CSAs of their countries and target to attract manufacturing FDI from product categories with matching competitive strategies and FSAs.

Originality/value

The research contributes to discussions in explaining manufacturing location choices. Its originality lies in being the first study to test the fit of competitive strategies and FSAs of product categories with CSAs.

Details

Competitiveness Review: An International Business Journal , vol. 30 no. 3
Type: Research Article
ISSN: 1059-5422

Keywords

Article
Publication date: 9 March 2012

Rajneesh Narula and Grazia D. Santangelo

This paper examines the role of location‐specific (L) advantages in the spatial distribution of multinational enterprise (MNE) R&D activity. The meaning of L advantages is…

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Abstract

Purpose

This paper examines the role of location‐specific (L) advantages in the spatial distribution of multinational enterprise (MNE) R&D activity. The meaning of L advantages is revisited. In addition to L advantages that are industry‐specific, the paper emphasises that there is an important category of L advantages, referred to as collocation advantages.

Design/methodology/approach

Using the OLI framework, this paper highlights that the innovation activities of MNEs are about interaction of these variables, and the essential process of internalising L advantages to enhance and create firm‐specific advantages.

Findings

Collocation advantages derive from spatial proximity to specific unaffiliated firms, which may be suppliers, competitors, or customers. It is also argued that L advantages are not always public goods, because they may not be available to all firms at a similar or marginal cost. These costs are associated with access and internalisation of L advantages, and – especially in the case of R&D – are attendant with the complexities of embeddedness.

Originality/value

The centralisation/decentralisation, spatial separation/collocation debates in R&D location have been mistakenly viewed as a paradox facing firms, instead of as a trade‐off that firms must make.

Article
Publication date: 19 February 2021

Hamid Moradlou, Hendrik Reefke, Heather Skipworth and Samuel Roscoe

This study investigates the impact of geopolitical disruptions on the manufacturing supply chain (SC) location decision of managers in UK multinational firms. The context of study…

4379

Abstract

Purpose

This study investigates the impact of geopolitical disruptions on the manufacturing supply chain (SC) location decision of managers in UK multinational firms. The context of study is the UK manufacturing sector and its response to the UK's decision to leave the European Union (EU), or Brexit.

Design/methodology/approach

The study adopts an abductive, theory elaboration approach and expands on Dunning's eclectic paradigm of international production. A Delphi study over four iterative rounds is conducted to gather and assess insights into manufacturing SC location issues related to Brexit. The panel consisted of 30 experts and managers from a range of key industries, consultancies, governmental organisations, and academia. The Delphi findings are triangulated using a focus group with 38 participants.

Findings

The findings indicate that the majority of companies planned or have relocated production facilities from the UK to the EU, and distribution centres (DCs) from the EU to the UK. This was because of market-seeking advantages (being close to major centres of demand, ease of access to local and international markets) and efficiency-seeking advantages (costs related to expected delays at ports, tariff and non-tariff barriers). Ownership and internalisation advantages, also suggested by the eclectic paradigm, did not play a role in the location decision.

Originality/value

The study elaborates on the OLI framework by showing that policy-related uncertainty is a primary influencing factor in the manufacturing location decision, outweighing the importance of uncertainty as an influencer of governance mode choices. The authors find that during geopolitical disruptions managers make location decisions in tight time-frames with incomplete and imperfect information, in situations of high perceived uncertainty. The study elaborates on the eclectic paradigm by explaining how managerial cognition and bounded rationality influence the manufacturing location decision-making process.

Details

International Journal of Operations & Production Management, vol. 41 no. 2
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 1 April 2003

Georgios I. Zekos

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…

86533

Abstract

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

Details

Managerial Law, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0558

Keywords

Book part
Publication date: 26 July 2007

Lilach Nachum and Clifford Wymbs

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…

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.

Details

Regional Aspects of Multinationality and Performance
Type: Book
ISBN: 978-0-7623-1395-2

Article
Publication date: 31 May 2021

Damiano Lepori

The purpose of this study is to provide with a condensed overview of location competitiveness from the perspectives of specific pioneering theories to highlight the main factors…

Abstract

Purpose

The purpose of this study is to provide with a condensed overview of location competitiveness from the perspectives of specific pioneering theories to highlight the main factors, which lay the foundations for latter theories specifically dedicated to location-bound advantages, to specialization processes and, in fine, to location competitiveness.

Design/methodology/approach

The study is divided into five major sections. First, location competitiveness is tackled from Smith’s frame of reference in the theory of absolute advantages. Second, Ricardo’s comparative advantages are scrutinized and specific complementary findings to Smith are highlighted. Third, Marshall’s industrial districts are investigated, as they constitute the linchpin of numerous latter approaches on location competitiveness. Fourth, the Keynesian perspective is considered as far as the role of government on location competitiveness is concerned. Fifth, endogenous growth theories are considered as they relate to capital, innovation and knowledge, which are factors intrinsically associated with agglomeration patterns and to location competitiveness.

Findings

The main finding of this literature review suggests that pioneering theories also identify location competitiveness as having a fundamental influence on firms’ ability to prosper in terms of wealth creation and of competitive advantages and vice versa.

Originality/value

The originality of this study is to investigate seminal authors from the perspective of location competitiveness and to highlight how numerous later researches dedicated to the subject are indeed based on pioneering theories. On this basis, it is subsequently possible to capture location competitiveness and to implement relevant policy measures to improve economic prosperity.

Details

Competitiveness Review: An International Business Journal , vol. 32 no. 1
Type: Research Article
ISSN: 1059-5422

Keywords

Article
Publication date: 1 May 2007

Fan Liang and Stephen Nicholas

This paper investigates the location determinants of foreign investors and how the location decision‐making impacts on their knowledge transfer strategies. Survey data were…

Abstract

This paper investigates the location determinants of foreign investors and how the location decision‐making impacts on their knowledge transfer strategies. Survey data were collected in Yunnan, a southwest province of China. By examining two different sets of location factors at both the national and provincial levels, the research found that location factors at the provincial level, rather than at the national level, directly influenced foreign investors’ knowledge transfer strategies. The research also found that the support of Yunnan’s local government compensated for the underdeveloped endowment conditions of the province, significantly increasing knowledge transfer of foreign investors. The research suggests that foreign investors need to make appropriate location selection to efficiently exploit their ownership advantages. A well‐structured policy regime is required of host countries in order to encourage knowledge transfer by foreign investors.

Details

Journal of Asia Business Studies, vol. 1 no. 2
Type: Research Article
ISSN: 1558-7894

Keywords

Article
Publication date: 14 September 2020

Cláudia Beatriz Batschauer da Cruz, Dinorá Eliete Floriani and Mohamed Amal

This study aims to advance a sub-national perspective within the OLI Paradigm by analyzing how and to what extent the Eclectic Paradigm can serve as a general model to capture…

2833

Abstract

Purpose

This study aims to advance a sub-national perspective within the OLI Paradigm by analyzing how and to what extent the Eclectic Paradigm can serve as a general model to capture region-specific aspects of the location determinants of FDI, encompassing institutional effects that extend beyond the quality of institutions.

Design/methodology/approach

The authors conducted a systematic literature review of 41 selected papers published between 1990 and 2019. Using inductive content analysis, they investigated the theoretical choices used to support analyses of the effects of institutional factors on MNEs' location decisions at the sub-national level.

Findings

It was found that, when changing from the national to the sub-national level of analysis, there is no need to change the main assumptions used in the literature, although a different perspective must be adopted. The Eclectic Paradigm permeates most of the studies revised and can serve as a general model to capture the sub-national perspective. It offers a foundation for new perspectives on the dynamics of institutional and political factors and their effects on location strategies and determinants at the sub-national level. Adopting the OLI Paradigm with a sub-national approach could widen the IB literature's prevailing focus on traditional economic factors and institutional quality.

Research limitations/implications

The authors contribute to extant International Business literature Their paper enhances the literature on FDI location determinants by providing a more specific approach to development of a sub-national perspective within the OLI Paradigm, extending the institutional effects to capture more region-specific factors influencing the location of FDI. Study limitations are related to our analytical focus on the location dimension, excluding motives for FDI or firm-level location strategies. Rather than limiting analysis to quantitative studies, future research that includes qualitative studies and also covers the other dimensions of the OLI Paradigm could open additional new research avenues for advancing the sub-national perspective within the field of IB.

Practical implications

The authors’ main findings suggest that MNEs' location strategies should include a sub-national perspective, which means that firms need to assess different levels of the location and understand their interaction with nationwide constraints and limitations, as it may affect firms' ability to effectively conduct their value-adding activities. They also contribute elements that can support sub-national governments' actions and policies aiming to enhance locational advantages to attract and retain FDI.

Originality/value

This review specifically analyzes the location determinants of FDI at the sub-national level, in studies published in a broad set of journals, from a variety of fields, prioritizing articles that investigate sub-national institutional determinants. The authors derive implications for the International Business literature and propose that the sub-national dimension should be incorporated into the Eclectic paradigm in order to better understand the influence of institutional sub-national determinants.

Details

International Journal of Emerging Markets, vol. 17 no. 1
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 17 November 2014

Simon C. Collinson and Rajneesh Narula

This paper aims to examine how multinational enterprises (MNEs) and local partners, including suppliers, customers and competitors in China, improve their innovation capabilities…

Abstract

Purpose

This paper aims to examine how multinational enterprises (MNEs) and local partners, including suppliers, customers and competitors in China, improve their innovation capabilities through collaboration. This collaboration was analysed as a three-way interaction between the ownership-specific (O) advantages or firm-specific assets (FSAs) of the MNE subsidiary, the FSAs of the local partner and the location-specific assets of the host location.

Design/methodology/approach

The propositions are examined through a survey of 320 firms, supplemented with 30 in-depth case studies, based in Mainland China.

Findings

It is found that the recombination of asset-type (Oa) FSAs and transaction-type (Ot) FSAs from both partners leads to new innovation-related ownership advantages, or “recombinant advantages”. Ot FSAs, in the form of access to local suppliers, customers or government networks are particularly important for reducing the liability of foreignness for MNEs.

Originality/value

The study reveals important patterns of reciprocal transfer, sharing and integration for different asset categories (tacit, codified) and different forms of FSA and explicitly links these to different innovation performance outcomes. The paper reports on these findings, making an empirical contribution in an important context (China-based partnerships). This paper also contributes to conceptual developments, connecting various kinds of FSA, tacit and codifiable assets and “recombinant advantages”. Limited conceptual, methodological and empirical contributions are made in linking asset integration with (measurable) innovation performance outcomes in international partnerships.

Details

The Multinational Business Review, vol. 22 no. 4
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 18 July 2016

Kirankumar S. Momaya

The purpose of this paper is to analyze the patterns of location of key activities for break-out in corporate competitiveness. The key objective is to identify linkages that may…

Abstract

Purpose

The purpose of this paper is to analyze the patterns of location of key activities for break-out in corporate competitiveness. The key objective is to identify linkages that may exist among the location of corporate center activities, innovation capabilities and the break-out.

Design/methodology/approach

Patterns of location of corporate center across the world have been explored first, using sample data from Global 500. For the context of innovation and India, two polar locations were selected. The patterns in the growth of focal firms from the locations were evaluated using select competitiveness criteria such as revenues, profits and assets, based on data of a larger sample from Global 2000.

Findings

Findings support the view on “role of location with innovation clusters” such as Bangalore, particularly for competitiveness of born global firms. Surprisingly, Mumbai has increased its percentage share of contributions in terms of revenues and profits, indicating sustenance of cluster, entrepreneurial and other advantages.

Practical implications

Considering the enormous scope for enhancing contributions of emerging-country multinational enterprises to the world economy, decisions related to break-out in competitiveness are critical. Depending on strategic intent and the role of innovation and internationalization, firms can take better decisions related to the location of specific corporate activities to foster multinational enterprise (MNE) competitiveness.

Social implications

The findings may inspire key stakeholders to take decisions that enhance sustainability of city clusters and communities.

Originality/value

Analyzing the role of location of key corporate activities, for the phenomenon “break-out to higher stages of competitiveness”, is a unique contribution. These concepts and findings can be of high value to firms and MNEs thinking long term about location or relocation of corporate center activities, particularly for innovation.

1 – 10 of over 71000