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The Home-based Advantages and a Hierarchy of Location Advantages: Foreign and British-owned Firms in the London Wholesale Insurance Market

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  • Lilach Nachum

Abstract

This study seeks to explain why, in some cases, locationally advantageous countries attract foreign firms, who develop dominant competitive positions in the market, rather than facilitate the development of internationally competitive national firms, as theory suggests. Comparative analyses of samples of foreign and British-owned insurance firms in the London wholesale insurance market are used to establish a hierarchy of location advantages in terms of their competitive importance. It is shown that foreign affiliates compensate for their liability in accessing Britain’s location advantages by accessing resources via the MNE internal networks. Their competitive strength is based primarily on such resources. The contributions of the findings to the conceptualisation of the MNE as an internal network within an external network, and the potential substitution of internal and external resources, are discussed. The implications for the theory of the national origin of the competitive advantages of MNEs are outlined.

Suggested Citation

  • Lilach Nachum, 2003. "The Home-based Advantages and a Hierarchy of Location Advantages: Foreign and British-owned Firms in the London Wholesale Insurance Market," Working Papers wp260, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp260 Note: PRO-1
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    References listed on IDEAS

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    1. C Lane & S Quack, 2001. "How Banks Construct and Manage Risk: A Sociological Study of Small Firm Lending in Britain and Germany," Working Papers wp217, Centre for Business Research, University of Cambridge.
    2. Deeg, Richard, 2001. "Institutional change and the uses and limits of path dependency: The case of German finance," MPIfG Discussion Paper 01/6, Max Planck Institute for the Study of Societies.
    3. Streeck, Wolfgang, 2001. "The transformation of corporate organization in Europe: An overview," MPIfG Working Paper 01/8, Max Planck Institute for the Study of Societies.
    4. Simon Deakin & Richard Hobbs & David Nash & Giles Slinger, 2002. "Implicit contracts, takeovers and corporate governance: in the shadow of the city code," Working Papers wp254, Centre for Business Research, University of Cambridge.
    5. S. Deakin & R. Hobbs & S. Konzelmann & F. Wilkinson, 2001. "Partnership, Ownership and Control: The Impact of Corporate Governance on Employment Relations," Working Papers wp200, Centre for Business Research, University of Cambridge.
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    More about this item

    Keywords

    insurance; London; nationality of ownership; MNE internal transfers;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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