Global Cities and Multinational Enterprise Location Strategy

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    We combine the concept of location derived by economic geographers with theories of the multinational enterprise (MNE) and the liability of foreignness developed by international business scholars, to examine the factors that propel MNEs toward, or away from, “global cities”. We argue that three distinctive characteristics of global cities – global interconnectedness, cosmopolitanism, and abundance of advanced producer services – help MNEs overcome the costs of doing business abroad, and we identify the contingencies under which these characteristics combine with firm attributes to exert their strongest influence. Consistent with these arguments, our analysis of a large sample of MNE location decisions using a multilevel multinomial model suggests not only that MNEs have a strong propensity to locate within global cities, but also that these choices are associated with a nuanced interplay of firm- and subsidiary-level factors, including investment motives, proprietary capabilities, and business strategy. Our study provides important insights for international business scholars by shedding new light on MNE location choices and also contributes to our understanding of economic geography by examining the heterogeneous strategies and capabilities of MNEs – the primary agents of economic globalization – that shape the nature of global cities.

    Original languageEnglish
    JournalJournal of International Business Studies
    Volume44
    Issue number5
    Pages (from-to)427–450
    ISSN0047-2506
    DOIs
    Publication statusPublished - 2013

    Cite this

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    title = "Global Cities and Multinational Enterprise Location Strategy",
    abstract = "We combine the concept of location derived by economic geographers with theories of the multinational enterprise (MNE) and the liability of foreignness developed by international business scholars, to examine the factors that propel MNEs toward, or away from, “global cities”. We argue that three distinctive characteristics of global cities – global interconnectedness, cosmopolitanism, and abundance of advanced producer services – help MNEs overcome the costs of doing business abroad, and we identify the contingencies under which these characteristics combine with firm attributes to exert their strongest influence. Consistent with these arguments, our analysis of a large sample of MNE location decisions using a multilevel multinomial model suggests not only that MNEs have a strong propensity to locate within global cities, but also that these choices are associated with a nuanced interplay of firm- and subsidiary-level factors, including investment motives, proprietary capabilities, and business strategy. Our study provides important insights for international business scholars by shedding new light on MNE location choices and also contributes to our understanding of economic geography by examining the heterogeneous strategies and capabilities of MNEs – the primary agents of economic globalization – that shape the nature of global cities.",
    keywords = "Global cities, Liability of foreignness, Foreign direct investment, Alliances and joint ventures, Location strategy, Internationalization",
    author = "Anthony Goerzen and {Geisler Asmussen}, Christian and Nielsen, {Bo Bernhard}",
    year = "2013",
    doi = "10.1057/jibs.2013.11",
    language = "English",
    volume = "44",
    pages = "427–450",
    journal = "Journal of International Business Studies",
    issn = "0047-2506",
    publisher = "Palgrave Macmillan Ltd.",
    number = "5",

    }

    Global Cities and Multinational Enterprise Location Strategy. / Goerzen, Anthony ; Geisler Asmussen, Christian; Nielsen, Bo Bernhard.

    In: Journal of International Business Studies, Vol. 44, No. 5, 2013, p. 427–450.

    Research output: Contribution to journalJournal articleResearchpeer-review

    TY - JOUR

    T1 - Global Cities and Multinational Enterprise Location Strategy

    AU - Goerzen, Anthony

    AU - Geisler Asmussen, Christian

    AU - Nielsen, Bo Bernhard

    PY - 2013

    Y1 - 2013

    N2 - We combine the concept of location derived by economic geographers with theories of the multinational enterprise (MNE) and the liability of foreignness developed by international business scholars, to examine the factors that propel MNEs toward, or away from, “global cities”. We argue that three distinctive characteristics of global cities – global interconnectedness, cosmopolitanism, and abundance of advanced producer services – help MNEs overcome the costs of doing business abroad, and we identify the contingencies under which these characteristics combine with firm attributes to exert their strongest influence. Consistent with these arguments, our analysis of a large sample of MNE location decisions using a multilevel multinomial model suggests not only that MNEs have a strong propensity to locate within global cities, but also that these choices are associated with a nuanced interplay of firm- and subsidiary-level factors, including investment motives, proprietary capabilities, and business strategy. Our study provides important insights for international business scholars by shedding new light on MNE location choices and also contributes to our understanding of economic geography by examining the heterogeneous strategies and capabilities of MNEs – the primary agents of economic globalization – that shape the nature of global cities.

    AB - We combine the concept of location derived by economic geographers with theories of the multinational enterprise (MNE) and the liability of foreignness developed by international business scholars, to examine the factors that propel MNEs toward, or away from, “global cities”. We argue that three distinctive characteristics of global cities – global interconnectedness, cosmopolitanism, and abundance of advanced producer services – help MNEs overcome the costs of doing business abroad, and we identify the contingencies under which these characteristics combine with firm attributes to exert their strongest influence. Consistent with these arguments, our analysis of a large sample of MNE location decisions using a multilevel multinomial model suggests not only that MNEs have a strong propensity to locate within global cities, but also that these choices are associated with a nuanced interplay of firm- and subsidiary-level factors, including investment motives, proprietary capabilities, and business strategy. Our study provides important insights for international business scholars by shedding new light on MNE location choices and also contributes to our understanding of economic geography by examining the heterogeneous strategies and capabilities of MNEs – the primary agents of economic globalization – that shape the nature of global cities.

    KW - Global cities

    KW - Liability of foreignness

    KW - Foreign direct investment

    KW - Alliances and joint ventures

    KW - Location strategy

    KW - Internationalization

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    DO - 10.1057/jibs.2013.11

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