Innovation and Strategy in Space: Towards a New Location Theory of the Firm

  • Maryann P. Feldman
  • Aydan S. Kutay
Part of the Advances in Spatial Science book series (ADVSPATIAL)

Abstract

Traditional location theory suggests that individual firms freely scan the environment and select a location which minimizes production costs (see Garafola and Fogerty 1988). According to this theory, locational advantage reflects conventional natural advantages associated with land, labour and capital. Emphasis is given to production and specifically to the exploitation of economies of scale, but the theory does not accommodate the increased importance of innovation, or the ability to produce higher quality products. In order to engage in innovation, firms must coordinate a variety of activities both within their functional boundaries and with their external environments. An important dimension of innovation is product variety, which is defined as the adaptation of new products to specific market segments. Product variety becomes critical to competitive strategy in a global economy, as it offers firms a way to increase market share through improved time-to-market acceptance. Business strategists have focused on questions of coordination in an increasingly borderless world. Less attention however, has been paid to developing a locational theory which would consider the geographic organization of the firm’s activity. Location may offer firms an effective way to organize resources in light of the increased importance of product variety in innovation. In addition, such a theory should also consider the potential of new technologies in communication and production for altering locational dynamics and requirements.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Business Week 1994. 21st Century Capitalism. Special IssueGoogle Scholar
  2. Clark G L, Gertler M and J Whiteman (1988) Regional Dynamics: Studies in Adjustment Theory. Allen and Unwin BostonGoogle Scholar
  3. Dicken P (1992) Global Shift. Guillord Press New YorkGoogle Scholar
  4. Feldman M P (1994) The Geography of Innovation. Kluwer Academic Press BostonGoogle Scholar
  5. Garafola G A and M S Fogerty (1988) The Role of Labor Costs in Regional Capital Formation. Review of Economics and Statistics. November 1988 70: 593–599.Google Scholar
  6. Inman A R and S Mebra (1990) The Transferability of JIT Concepts to American Small Businesses. Interfaces March-April: 30–37Google Scholar
  7. Jaikumar R (1986) Postindustrial Manufacturing. Harvard Business Review. November-December: 69–76Google Scholar
  8. Japan Trade Organization (1990). Research ReportGoogle Scholar
  9. Kutay A (1988) Technological Change and Spatial Transformation in an Information. Economy I. Environment and Planning A. 20: 569–593CrossRefGoogle Scholar
  10. Kutay A (1988) Technological Change and Spatial Transformation in an Information. Economy 2. Environment and Planning A. 20: 707–718CrossRefGoogle Scholar
  11. Luria P (1990) Automation, Markets and Scale: Can Flexible Niching Modernize U.S. Manufacturing? International Review of Applied Economics. June: 127–165Google Scholar
  12. Maruca R F The Right Way to Go Global, An Interview with Whirlpool CEO David Whitman. Harvard Business Review 72: 135-145Google Scholar
  13. Mody A, Suri R and J Sanders (1992) Keeping Pace with Change: Organizational and Technological Imperatives. World Development 20: 1797–1816CrossRefGoogle Scholar
  14. Scott A J (1993) Technoplis: High Technology Industry and Regional Development in Southern California. University of California Press BerkeleyGoogle Scholar
  15. Storper M and R Walker (1988) The Capitalist Imperative: Territory, Technology and Industrial Growth. Basil Blackwell OxfordGoogle Scholar
  16. The Economist Yearbook 1993. Economist Books Ltd. LondonGoogle Scholar
  17. The Economist World Economy Survey (1992) Another World. September 19Google Scholar
  18. Trager C S (1989) Enter the Mini Multinational. Northeast International Business. MarchGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1997

Authors and Affiliations

  • Maryann P. Feldman
  • Aydan S. Kutay

There are no affiliations available

Personalised recommendations