Multinationals and Economic Geography

Multinationals and Economic Geography

Location, Technology and Innovation

Simona Iammarino and Philip McCann

After more than fifty years of systematic research on multinational enterprises (MNEs) what is apparent is that there is, as yet, no unified or dominant theory of the MNE. The objective of this book is to bring into focus one particular dimension of MNE behaviour and activity that has been relatively under-researched – namely the geography of the multinational enterprise – as understood through the lens of innovation and technological change. The authors clearly demonstrate that geography is becoming increasingly important for MNEs and, in turn, MNEs are becoming progressively more important for economic geography. The pivot on which this vital relationship turns is the creation, diffusion and management of new knowledge.

Chapter 2: Old and new(er) theories of multinational enterprises: selected perspectives and the search for location

Simona Iammarino and Philip McCann

Subjects: business and management, international business, economics and finance, economics of innovation, international business, regional economics, geography, economic geography, innovation and technology, economics of innovation, urban and regional studies, regional economics


As we stated in the introductory chapter, the major questions about multinationality have typically focussed on the determinants – i.e. the why, where and how firms become multinational – and the effects – i.e. the change on the economies invested in by the MNE operations and also the impacts on the MNE firm itself which are induced by the MNE’s expansion and activity. The focus of the present chapter is on the geography of the multinational enterprise as discussed in the theoretical literature. Even though one of the core questions regarding MNEs is precisely that of where their different operations take place, the location of MNEs has so far been largely neglected. The theoretical approaches discussed below are not meant to provide an exhaustive survey of the literature on the determinants and impacts of multinational activity, but rather to explain in broad terms how geography and space have been dealt with implicitly or explicitly in scholarly thinking on MNEs. Beyond those reported in the present chapter, many other attempts to theorize multinationality find their roots in economics and finance (e.g., Aliber 1970; Rugman 1979; Culem 1988; Kojima 1973, 1982b, 1990), as well as in other disciplines such as political economics (e.g., Cowling and Sugden 1987a) or organizational theory (e.g., Aharoni 1966).

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