Globalization and location choice: an analysis of US multinational firms in 1980 and 2000
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Globalization and location choice: an analysis of US multinational firms in 1980 and 2000
Ricardo G Flores and Ruth V Aguilera Department of Business Administration, College of Business, University of Illinois at Champaign-Urbana, IL, USA Correspondence: Ricardo G Flores, Department of Business Administration, College of Business, University of Illinois at Champaign-Urbana, 350 Wohlers Hall-1206 South Sixth St, Champaign, IL 61820, USA. Tel: þ 1 217 333 2588; Fax: þ 1 217 244 7969; E-mail: [email protected]
Abstract In this paper we examine foreign location choices of the top 100 US multinational corporations (MNCs) in 1980 and 2000. We first ask whether there has been a change in MNC foreign location choice in this two-decade period. Second, we explore the underlying reasons of location change by focusing on country-level factors, accounting for firm-, industry- and regionallevel explanations. Our findings suggest, first, that the extent of MNCs’ activities around the globe is more extensive than assumed by regionalists’ arguments and well beyond Ohmae’s TRIAD, but still less widespread than claimed by the globalists – the two main traditions within the globalization– regionalization debate. Second, we uncover an interesting de-location pattern in this period. Third, we develop an integrative framework where both economic and institutional-cultural arguments are shown to influence MNCs’ foreign location choice in different ways. We conclude with a discussion of our findings, and provide suggestions for future research. Journal of International Business Studies (2007) 38, 1187–1210. doi:10.1057/palgrave.jibs.8400307 Keywords: MNC foreign location choice; host country factors; global strategy; regional strategy; globalization
Received: 23 November 2005 Revised: 22 May 2007 Accepted: 8 June 2007 Online publication 2 August 2007
Introduction Multinational corporations (MNCs) have played a central role in the global economic, social and political changes commonly referred to as globalization (Held and McGrew, 2000). According to the United Nations Conference on Trade and Development (UNCTAD, 2005), there are more than 50,000 companies worldwide that qualify as MNCs, and the world’s largest MNCs represent about 25% of the world’s GDP, and virtually half of total world trade. In addition to MNCs’ notable participation in the world economy, they are singled out as powerful ideological, cultural and political agents (Dicken, 1998; Agmon, 2003). The process of internationalization of MNCs and the rationale of their foreign location choice are at the core of IB research (Dunning, 1998; Eden and Lenway, 2001). The liberalization of capital markets, the acceleration of information flows, the higher mobility of people and products, the decline in transportation costs and a relative global regulatory harmonization are some of the factors that have influenced MNCs’ internationalization strategies (Dunning, 2001, 2002; Gatignon and Kimber
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