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Location strategy in cluster networks

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Abstract

This article investigates the location strategies of Canadian and Chinese multisite firms in international and domestic investment decisions at the metropolitan level. By integrating research from international business studies and economic geography, we combine knowledge-based understandings of multinational corporations and industrial clusters to develop propositions regarding the location strategies of multisite firms in cluster networks. It is argued that firms from clusters are more likely to adopt knowledge strategies than firms from other areas and that they tend to choose cluster locations that are specialized in the same or similar industries to achieve their knowledge goals – both in domestic and international investment decisions. We establish and analyze a database of 3500 investment cases within and between Canada and China to test our propositions. The results show that firms in knowledge-intensive industrial environments with substantial business experience are especially inclined to direct their investments to clusters. Consistent with our emphasis of the subnational as opposed to the national scale, we find that cluster-of-origin effects are more important than country-of-origin effects in explaining firms’ investment choices in clusters. These findings support the idea that multisite firms, particularly MNEs, leverage local knowledge pools by strategically locating affiliates across clusters.

Résumé

Cet article étudie les stratégies de localisation des entreprises multi-sites canadiennes et chinoises concernant les décisions d’investissements nationaux et internationaux à l’échelle métropolitaine. En intégrant les recherches de l’international business et de la géographie économique, nous combinons les conceptions fondées sur la connaissance des entreprises multinationales et des clusters industriels pour élaborer des propositions concernant les stratégies de localisation des entreprises multi-sites au sein de réseaux de clusters. Nous considérons que les entreprises implantées dans des clusters sont plus susceptibles d’adopter des stratégies de la connaissance que les entreprises d’autres secteurs et qu’elles ont tendance à choisir leur localisation dans des clusters qui sont spécialisés dans les industries identiques ou similaires pour atteindre leurs objectifs de connaissance – pour les décisions d’investissements nationaux comme internationaux. Pour tester nos propositions, nous établissons et analysons une base de données de 3500 cas d’investissements au sein et entre le Canada et la Chine. Les résultats montrent que les entreprises situées dans des environnements de savoirs industriels forts avec une importante expérience des affaires sont particulièrement enclines à diriger leurs investissements vers des clusters. Conformément à l’emphase mise sur l’échelle sub-nationale par opposition à l’échelle nationale, nous constatons que les effets du cluster d’origine sont plus importants que les effets du pays d’origine pour expliquer les choix d’investissements des entreprises dans les clusters. Ces résultats confortent l’idée que les entreprises multi-sites, particulièrement les multinationales, tirent parti de bassins locaux de connaissances en plaçant stratégiquement leurs filiales dans différents clusters.

Resumen

Este artículo investiga las estrategias de localización de empresas multi-céntricas canadienses y chinas y las decisiones de inversión doméstica a nivel metropolitano. Al integrar la investigación de los estudios de negocios internacionales y de la geografía económica, combinamos los entendimientos basados en conocimiento de las empresas multinacionales y los clústeres industriales para desarrollar proposiciones con relación a las estrategias de ubicación de empresas multi-céntricas en redes de clústeres. Se argumenta que las empresas de clústeres son más propensas a adoptar estrategias de conocimiento que las empresas de otras áreas y que tienden a escoger ubicaciones en clúster que son especializadas en la misma industria o en industrias similares para alcanzar sus metas de conocimiento –tanto en las decisiones de inversión domesticas como internacionales. Establecemos y analizamos una base de datos con 3500 casos de inversiones dentro y entre Canadá y China para probar nuestras proposiciones. Los resultados muestran que las empresas en entornos industriales intensivos en conocimiento con experiencia sustancial en negocios son especialmente inclinadas a dirigir sus inversiones a clústeres. De manera consistente con nuestro énfasis en la escala sub-nacional en contraste con la escala nacional, encontramos que los efectos del origen del clúster son más importantes que los efectos del país de origen en explicar las decisiones de las empresas en clústeres. Estos hallazgos apoyan la idea que las empresas multi-céntricas, particularmente las multinacionales aprovechan las reservas locales de conocimiento mediante la ubicación estratégica de las filiales entre los clústeres.

Resumo

Este artigo investiga as estratégias de localização de firmas estabelecidas em vários locais do Canadá e da China em decisões de investimentos internacionais e domésticos no nível metropolitano. Ao integrar pesquisas em estudos de negócios internacionais e geografia econômica, combinamos entendimentos baseados no conhecimento de corporações multinacionais e clusters industriais para desenvolver proposições sobre as estratégias de localização de empresas estabelecidas em vários locais em redes de cluster. Argumenta-se que as empresas de clusters são mais propensas a adotar estratégias de conhecimento do que empresas de outras áreas e que tendem a escolher locais de cluster especializados nas mesmas indústrias ou similares para alcançar seus objetivos de conhecimento - tanto em decisões de investimento nacionais quanto internacionais. Nós estabelecemos e analisamos um banco de dados de 3500 casos de investimento dentro e entre Canadá e China para testar nossas proposições. Os resultados mostram que empresas em ambientes industriais intensivos em conhecimento com experiência comercial substancial são especialmente inclinadas a direcionar seus investimentos para clusters. De acordo com a nossa ênfase na escala subnacional em vez da escala nacional, achamos que os efeitos do cluster de origem são mais importantes do que os efeitos do país de origem ao explicar as escolhas de investimento das empresas em clusters. Essas descobertas sustentam a ideia de que as empresas estabelecidas em vários locais, particularmente as multinacionais, alavancam os pools de conhecimento local, localizando estrategicamente afiliados entre os clusters.

概要

本文探讨在大都市层面加拿大和中国多位点公司的国际国内投资决策的位置策略。通过整合国际商务研究和经济地理,我们结合对跨国公司和产业集群基于知识的理解提出关于集群网络多位点公司位置策略的命题。我们认为,无论是在国内还是国际投资决策中,集群型公司与其它公司相比更倾向于采用知识策略,且倾向于选择那些从事相同或相近行业的集群位置,以实现它们的知识目标 。我们建立和分析在加拿大和中国以及它们之间的3500个投资案例的数据库,以测试我们的命题。结果表明,知识密集型工业环境里商业经验丰富的公司尤其倾向于直接向集群投资。与我们强调次国家而不是国家规模相一致,我们发现,原产群效应对解释公司的集群投资选择比原产国效应更重要。这些发现支持这一想法,即多位点公司,特别是跨国公司,通过跨集群战略定位分支机构来充分利用本土知识池。

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Acknowledgements

We would like to thank the editor and three anonymous reviewers for insightful and supportive comments and Patrick Cohendet, Stéphane Coudé, Daniel Hutton Ferris, Sufyan Katariwala, Yuefang Si, Ari Van Assche, Gang Zeng, and Yi-Wen Zhu for additional suggestions of how to sharpen our arguments. We owe special thanks to Sebastian Henn and the Leibnitz-Institut für Länderkunde (Leibniz Institute for Regional Geography), especially Sebastian Lentz, for critical support in the data acquisition process. Financial support through a Social Sciences and Humanities Research Council (SSHRC) Insight Grant (Number 91855), a Policy Grant from the Asia Pacific Foundation of Canada in Vancouver (Number PRG-14-01), the Canada Research Chair in Innovation and Governance at the University of Toronto, and a Banting Postdoctoral Fellowship in Canada is greatly appreciated.

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Authors and Affiliations

  1. Department of International Business, HEC Montréal, Montréal, QC, Canada

    Pengfei Li

  2. Department of Political Science and Department of Geography and Planning, University of Toronto, Sidney Smith Hall, 100 St. George Street, Toronto, ON, M5S 3G3, Canada

    Harald Bathelt

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  1. Pengfei Li
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  2. Harald Bathelt
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Correspondence to Harald Bathelt.

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Accepted by Ram Mudambi, Area Editor, 26 May 2017. This article has been with the authors for three revisions.

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Li, P., Bathelt, H. Location strategy in cluster networks. J Int Bus Stud 49, 967–989 (2018). https://doi.org/10.1057/s41267-017-0088-6

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