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Location Choices Across the Value Chain: How Activity and Capability Influence Collocation

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  • Juan Alcácer

    () (Stern School of Business, New York University, 40 West 4th Street, Tisch Hall 7-10, New York, New York 10012)

Abstract

There has been a recent revival of interest in the geographic component of firm strategy. Recent research suggests that two opposing forces--competition costs and agglomeration benefits--determine whether firms collocate in a given geographic market. Unexplored is (1) whether these forces have different impacts on R& D, production, and sales subsidiaries, leading to diverse collocation levels, and (2) how firm capabilities impact collocation by increasing or decreasing competition costs and agglomeration benefits. I explore these questions using the worldwide location decisions of firms in the cellular handset industry. I find that production and sales subsidiaries are more geographically dispersed, and R& D subsidiaries are more concentrated, than a random distribution would predict. When distinguishing firms by their capabilities, I find that more-capable firms collocate less than less-capable firms, regardless of the activity performed.

Suggested Citation

  • Juan Alcácer, 2006. "Location Choices Across the Value Chain: How Activity and Capability Influence Collocation," Management Science, INFORMS, vol. 52(10), pages 1457-1471, October.
  • Handle: RePEc:inm:ormnsc:v:52:y:2006:i:10:p:1457-1471
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    File URL: http://dx.doi.org/10.1287/mnsc.1060.0658
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    References listed on IDEAS

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    Cited by:

    1. Delgado, Mercedes & Porter, Michael E. & Stern, Scott, 2014. "Clusters, convergence, and economic performance," Research Policy, Elsevier, vol. 43(10), pages 1785-1799.
    2. J. Knoben, 2009. "Localized inter-organizational linkages, agglomeration effects, and the innovative performance of firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(3), pages 757-779, September.
    3. Evan Rawley & Robert Seamans, 2015. "Intra-Firm Spillovers? The Stock and Flow Effects of Collocation," Working Papers 15-01, Center for Economic Studies, U.S. Census Bureau.
    4. Ron Boschma & Koen Frenken, 2011. "The emerging empirics of evolutionary economic geography," Journal of Economic Geography, Oxford University Press, vol. 11(2), pages 295-307, March.
    5. Canfei He & Xiaojun Xiao, 2011. "Geography of Multinational Corporations and Functional Specialization in Chinese Cities," Symphonya. Emerging Issues in Management, University of Milano-Bicocca, issue 1 Global .
    6. Lydia Bals & Jon F. Kirchoff & Kai Foerstl, 2016. "Exploring the reshoring and insourcing decision making process: toward an agenda for future research," Operations Management Research, Springer, vol. 9(3), pages 102-116, December.
    7. Joris Knoben & L. A. G. (Leon) Oerlemans & R. P. J. H. (Roel) Rutten, 2008. "The Effects of Spatial Mobility on the Performance of Firms," Economic Geography, Clark University, vol. 84(2), pages 157-183, April.
    8. Nunzia Carbonara & Ilaria Giannoccaro, 2014. "Determinants of MNC location choice in industrial districts: an empirical analysis in Italy," Chapters,in: Agglomeration, Clusters and Entrepreneurship, chapter 5, pages 85-102 Edward Elgar Publishing.
    9. Juan Alcácer & Cristian Dezső & Minyuan Zhao, 2015. "Location choices under strategic interactions," Strategic Management Journal, Wiley Blackwell, vol. 36(2), pages 197-215, February.
    10. repec:bla:stratm:v:37:y:2016:i:12:p:2441-2462 is not listed on IDEAS
    11. Lilach Nachum & Srilata Zaheer & Shulamith Gross, 2008. "Does It Matter Where Countries Are? Proximity to Knowledge, Markets and Resources, and MNE Location Choices," Management Science, INFORMS, vol. 54(7), pages 1252-1265, July.
    12. repec:pal:jintbs:v:48:y:2017:i:7:d:10.1057_s41267-017-0072-1 is not listed on IDEAS
    13. Rajneesh Narula & Tiju Prasad Kodiyat, 2014. "How Home Country Weaknesses Can Constrain Further EMNE Growth: Extrapolating from the Example of India," John H Dunning Centre for International Business Discussion Papers jhd-dp2014-01, Henley Business School, Reading University.
    14. Juan Alcacer & Mercedes Delgado, 2012. "Spatial Organization of Firms: Internal and External Agglomeration Economies and Location Choices Through the Value Chain," Working Papers 12-33, Center for Economic Studies, U.S. Census Bureau.
    15. Naveen Kumar Jain & Tanvi Kothari & Vikas Kumar, 2016. "Location Choice Research: Proposing New Agenda," Management International Review, Springer, vol. 56(3), pages 303-324, June.
    16. Otto Raspe & Frank Van Oort, 2014. "Entrepreneurial opportunity in innovative urban environments," Chapters,in: Knowledge, Innovation and Space, chapter 2, pages 29-50 Edward Elgar Publishing.
    17. Picone, Gabriel A. & Ridley, David B. & Zandbergen, Paul A., 2009. "Distance decreases with differentiation: Strategic agglomeration by retailers," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 463-473, May.
    18. Jiang, Guoliang F. & Holburn, Guy L.F. & Beamish, Paul W., 2016. "The spatial structure of foreign subsidiaries and MNE expansion strategy," Journal of World Business, Elsevier, vol. 51(3), pages 438-450.

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    Keywords

    FDI; location choice; firm heterogeneity;

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