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The Location Behavior of the Multinational Enterprise: Some Analytical Issues

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  • Philip McCann
  • Ram Mudambi

Abstract

In the international business literature location behavior has traditionally been analyzed using Dunning's (1977) OLI framework, which focuses on the nature, role, and behavior of multinational enterprise (MNE). In this paper it is argued that this approach is now no longer appropriate for discussing the spatial behavior of MNEs, because of the fundamental changes which have taken place either in MNE organization or in the global and institutional environment for foreign direct investment (FDI). At the same time, the paper argues that current location theory from regional economics and economic geography is also largely unsuitable for discussing these issues, such that the spatial behavior of the MNE provides a set of difficult challenges to location analysts. There appears to have been some response to these issues from the international business and management literature, most notably the Porter literature on clusters. However, it is also argued here that this literature provides few, if any, real answers to the problems set by the geographical behavior of the MNE. It is concluded that a fusion of traditional economic geography approaches with a focus on the information and organizational aspects of the firm and the region under consideration may be a way forward for both theory and empirical analysis. Copyright 2004 Gatton College of Business and Economics, University of Kentucky..

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  • Philip McCann & Ram Mudambi, 2004. "The Location Behavior of the Multinational Enterprise: Some Analytical Issues," Growth and Change, Wiley Blackwell, vol. 35(4), pages 491-524.
  • Handle: RePEc:bla:growch:v:35:y:2004:i:4:p:491-524
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    1. Norris C. Clement & Gustavo del Castillo Vera & James Gerber & William A. Kerr & Alan J. MacFayden & Stanford Shedd & Eduardo Zepeda & Diana Alarcón, 1999. "North American Economic Integration," Books, Edward Elgar Publishing, number 1799.
    2. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, May.
    3. May T. Yeung & Nicholas Perdikis & William A. Kerr, 1999. "Regional Trading Blocs in the Global Economy," Books, Edward Elgar Publishing, number 1781.
    4. James Simmie & James Sennett, 1999. "Innovative clusters: global or local linkages?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 170(1), pages 87-98, October.
    5. Börje Johansson & Charlie Karlsson & Roger R. Stough (ed.), 2002. "Regional Policies and Comparative Advantage," Books, Edward Elgar Publishing, number 2545.
    6. repec:sae:niesru:v:170:y::i:1:p:87-98 is not listed on IDEAS
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