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Industrial clusters, transactions costs and the institutional determinants of MNE location behaviour

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  • McCann, Philip
  • Arita, Tomokazu
  • Gordon, Ian R.

Abstract

This paper discusses the institutional and organizational assumptions underlying many of the currently popular notions of industrial clustering. By adopting a transactions costs perspective, we explain that there are three fundamentally different types of industrial cluster. We then discuss how the institutional differences between each of these clusters provide different possibilities for the location behaviour of the multiplant or multinational firm. Using two examples from the global semiconductor industry, we show that observations of industrial clusters must be interpreted very carefully when we are discussing multinational firms. The reason for this is that many simple clustering notions are predicated on assumptions which are often incompatible with multinational firms. The potential advantages of industrial clustering can only be understood when location strategies are considered with respect to the organizational and institutional logic of both the firm and the cluster.

Suggested Citation

  • McCann, Philip & Arita, Tomokazu & Gordon, Ian R., 2002. "Industrial clusters, transactions costs and the institutional determinants of MNE location behaviour," International Business Review, Elsevier, vol. 11(6), pages 647-663, December.
    • Handle: RePEc:eee:iburev:v:11:y:2002:i:6:p:647-663
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    1. Simona Iammarino & Philip McCann, 2010. "The Relationship between Multinational Firms and Innovative Clusters," Chapters, in: Ron Boschma & Ron Martin (ed.), The Handbook of Evolutionary Economic Geography, chapter 8, Edward Elgar Publishing.
    2. Koirala, Samjhana & Jakus, Paul M. & Watson, Philip, 2023. "Identifying Constraints to Rural Economic Development: A Development Guidance Function Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(3), September.
    3. Francisco Puig & Borja Portero & Miguel González-Loureiro, 2017. "Clustering strategy and development of subsidiaries in China," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(2), pages 221-243, June.
    4. Philip McCann & Ram Mudambi, 2005. "Analytical Differences in the Economics of Geography: The Case of the Multinational Firm," Environment and Planning A, , vol. 37(10), pages 1857-1876, October.
    5. Tommaso Pucci & Mara Brumana & Tommaso Minola & Lorenzo Zanni, 2020. "Social capital and innovation in a life science cluster: the role of proximity and family involvement," The Journal of Technology Transfer, Springer, vol. 45(1), pages 205-227, February.
    6. Pla-Barber, José & Alegre, Joaquín, 2007. "Analysing the link between export intensity, innovation and firm size in a science-based industry," International Business Review, Elsevier, vol. 16(3), pages 275-293, June.
    7. McCann, Philip & Arita, Tomokazu, 2006. "Clusters and regional development: Some cautionary observations from the semiconductor industry," Information Economics and Policy, Elsevier, vol. 18(2), pages 157-180, June.
    8. Pak, Yong Suhk & Park, Young-Ryeol, 2005. "Characteristics of Japanese FDI in the East and the West: Understanding the strategic motives of Japanese investment," Journal of World Business, Elsevier, vol. 40(3), pages 254-266, August.
    9. Reades, Jonathan & Smith, Duncan, 2014. "Mapping the ‘space of flows’: the geography of global business telecommunications and employment specialization in the London mega-city-region," LSE Research Online Documents on Economics 55812, London School of Economics and Political Science, LSE Library.
    10. Liao, Tsai-Ju, 2015. "Local clusters of SOEs, POEs, and FIEs, international experience, and the performance of foreign firms operating in emerging economies," International Business Review, Elsevier, vol. 24(1), pages 66-76.
    11. Danny T Wang & Simon X Zhao & Flora F Gu & Wendy Y Chen, 2011. "Power or Market? Location Determinants of Multinational Headquarters in China," Environment and Planning A, , vol. 43(10), pages 2364-2383, October.
    12. Iammarino, Simona & McCann, Philip, 2006. "The structure and evolution of industrial clusters: Transactions, technology and knowledge spillovers," Research Policy, Elsevier, vol. 35(7), pages 1018-1036, September.
    13. Nunzia Carbonara & Ilaria Giannoccaro, 2014. "Determinants of MNC location choice in industrial districts: an empirical analysis in Italy," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), Agglomeration, Clusters and Entrepreneurship, chapter 5, pages 85-102, Edward Elgar Publishing.
    14. da Silva, Fernando Moreira & Pereira, Renato & Ogasavara, Mario Henrique, 2024. "Assessing the effects of institutions on the ownership structure of MNCs investments in global cities," International Business Review, Elsevier, vol. 33(2).
    15. Majocchi, Antonio & Presutti, Manuela, 2009. "Industrial clusters, entrepreneurial culture and the social environment: The effects on FDI distribution," International Business Review, Elsevier, vol. 18(1), pages 76-88, February.
    16. Carlos Calderon & David O'Sullivan & Mike J de Smith & Nahid Mohajeri & Nicholas A Phelps & Kiril Stanilov & Jonathan Reades & Oliver O'Brien, 2011. "Reviews: Building for a Changing Climate: The Challenge for Construction, Planning and Energy, Perspectives on Spatial Data Analysis, Handbook of Spatial Statistics, Spacematrix: Space, Density and Ur," Environment and Planning B, , vol. 38(3), pages 564-574, June.
    17. Roxana Wright, 2022. "Subsidiary Activities: Parent Company and Local Predictors of Business Resilience ," GATR Journals jber226, Global Academy of Training and Research (GATR) Enterprise.
    18. Hendriks, Guus, 2020. "How the spatial dispersion and size of country networks shape the geographic distance that firms add during international expansion," International Business Review, Elsevier, vol. 29(6).
    19. Wu, Jun & Li, Shaomin & Samsell, Darryl, 2012. "Why some countries trade more, some trade less, some trade almost nothing: The effect of the governance environment on trade flows," International Business Review, Elsevier, vol. 21(2), pages 225-238.
    20. Sasaki, Innan & Yoshikawa, Katsuhiko, 2014. "Going beyond national cultures – Dynamic interaction between intra-national, regional, and organizational realities," Journal of World Business, Elsevier, vol. 49(3), pages 455-464.
    21. José Cadima Ribeiro & José de Freitas Santos, 2009. "Localização das Actividades e sua Dinâmica," NIPE Working Papers 20/2009, NIPE - Universidade do Minho.
    22. Purwaningrum, Farah & Evers, Hans-Dieter & Ariff Lim, Syamimi & Anthony Banyouko, Ndah, 2014. "The Governance of Knowledge: Perspectives from Brunei Darussalam and Malaysia," MPRA Paper 55170, University Library of Munich, Germany.
    23. Paul Ryan & Giulio Buciuni, 2024. "Gorillas can dance: lessons from Microsoft and other corporations on partnering with startups," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(3), pages 408-411, April.
    24. Jessie Poon & Alan MacPherson, 2003. "Technology Acquisition among Asian Firms and Technology Clusters in the United States," ERSA conference papers ersa03p203, European Regional Science Association.

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