Content area
Full text
1 Introduction
A critical nexus of research is the interaction between multinational enterprises (MNEs) and the geography of globalization. A rich literature has examined the organizational structures between parent MNEs and their overseas subsidiaries. This work originated in hierarchical, multidivisional (M Form), organizational structures, but moved towards the network (N Form). These firm-level interactions between parents and subsidiaries, or within MNE network linkages, need to be related to the nature of underlying firm-specific advantages (FSAs) of the MNE. These can either be non-location-bound FSAs or location-bound FSAs. Again, the literature has moved from early internalization theory with non-location-bound FSAs towards the more nuanced new internalization theory, which views FSAs as dynamic capabilities where there are resource recombinations taking place between units of the MNE and related actors in the home and host country environments ([38], [39], [40] Rugman and Verbeke, 1992, 2001, 2004; [45] Verbeke, 2009).
This recent work on MNE networks and dynamic capabilities needs to be better related to recent parallel work on the geography of globalization. By geography is meant location factors. These, again, have moved on from an early focus on country-specific advantages (CSAs) towards a new understanding of the nature of global economic activity as led by MNEs. This may usefully link to work on the double diamond ([2] Asmussen et al. , 2009).
In particular, economic geography acts as a counter to earlier simplistic thinking on globalization, which assumed that worldwide economic integration would lead to homogenization of firm production and consumer demand. In reality, as [34] Rugman (2005) has observed, the world's largest 500 firms conduct most of their business within their large home-region markets, averaging about 75 per cent of their sales in their home region. This finding has been confirmed by five years of data, 2001-2005, by [35] Rugman and Oh (2007).
This startling empirical refutation of worldwide economic integration suggests that the three broad triad regions need to replace CSAs as the key units of analysis in research on location-specific advantages. Yet, to date, there has been almost no published research on the nature of region-specific advantages and the nature of the liability of interregional foreignness. Can research on country culture be expanded to regional level? What is a regional version of cultural, administrative,...