The Palgrave Encyclopedia of Strategic Management

Living Edition
| Editors: Mie Augier, David J. Teece

Flatness

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DOI: https://doi.org/10.1057/978-1-349-94848-2_414-1
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Abstract

Spatial transaction costs, defined as the costs of co1ntrolling and coordinating economic activities that are dispersed over geographic space, fell at historically unprecedented rates over the twentieth century (Glaeser and Kohlhase Pap Reg Sci 83: 197–228, 2004). This megatrend underlies the disaggregation of final outputs into narrow, modularized activities that are dispersed over the globe to the most efficient locations and undertaken by specialized firms. Multinational firms re-aggregate these fine-sliced activities in global value chains to produce the goods and services that are seen on world markets. This process accounts for many of today’s observed outcomes, including the relocation of low-skill activities to low-wage economies and the consequent reduction in the standards of living of low-skill individuals in rich countries.

Keywords

Knowledge Spillover Voluntary Export Restraint High Gross Domestic Product Advanced Industrialize Country Rough Parity 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Notes

Acknowledgement

This entry is drawn largely from R. Mudambi. 2013. Flatness: the global disaggregation of value creation. In The Changing Geography of International Business, ed. G. Cook and J. Johns. Basingstoke: Palgrave Macmillan.

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© The Author(s) 2016

Authors and Affiliations

  1. 1.Fox School of BusinessPhiladelphiaUSA