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Journal of International Business Studies

, Volume 44, Issue 5, pp 427–450 | Cite as

Global cities and multinational enterprise location strategy

  • Anthony GoerzenEmail author
  • Christian Geisler Asmussen
  • Bo Bernhard Nielsen
Article

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 

Notes

Acknowledgements

Our thanks go to the seminar participants at Queen's University, the University of Leeds, Tilburg University, and the University of Leuven for guidance and support on earlier drafts of this paper, and to Claus Vistesen and Zijun Zhang for excellent research assistance. We also acknowledge Mark Lorenzen, Steve Tallman, and the participants at the JIBS Special Issue Conference at Temple University, who provided valuable input, as well as the three anonymous JIBS reviewers. Finally, we are grateful to Guest Editors Ram Mudambi and Sjoerd Beugelsdijk for their guidance during the review process, and for organizing this Special Issue. All remaining errors and omissions are our own.

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© Academy of International Business 2013

Authors and Affiliations

  • Anthony Goerzen
    • 1
    Email author
  • Christian Geisler Asmussen
    • 2
  • Bo Bernhard Nielsen
    • 2
    • 3
  1. 1.Queen's School of Business, Queen's UniversityKingstonCanada
  2. 2.Department of Strategic Management and GlobalizationCopenhagen Business SchoolCopenhagenDenmark
  3. 3.University of TechnologySydneyAustralia

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