Concentration and Dispersion in Global Industries: Remote Electronic Access and the Location of Economic Activities
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Industries: and
the
and Remote
Location
of
Electronic Economic
Global
in
Dispersion
Access Activities SrilataZaheer*
UNIVERSITY OF MINNESOTA
ShaliniManrakhan** UNIVERSITY OF MINNESOTA
We explore how the possibility of remote electronic access to markets, resources and knowledge, enabled by the new information and communication technologies (ICTs), might change the motivations of firms to locate activities internationally, and in turn affect worldwide dispersion and concentration in an industry. Preliminary results from an exploratory analysis of the spatial distribution of firms in fi-
T
he motivations for firms to locate
activities internationally have been one of the cornerstones of research in international business (Vernon, 1974; Dunning, 1993 and 1998). To the traditional motivations for location by multinational enterprises, such as marketseeking or resource-seeking investments, we have in recent decades added "new motivations" such as the search for ideas and innovation, and strategic motivations such as keeping a global competitor
nancial services suggest that the introduction of a business-to-business (B2B) trading network increases the global market participation of firms from peripheral countries, but does not appear to reduce the importance of locational clusters. A set of propositions is derived that provide guidance for more detailed research on the impact of ICTs on the strategy and structure of global industries. in check (Graham, 1978; Hamel and Prahalad, 1985). The information revolution challenges our assumptions about the tight coupling presumed to exist between international location and the realization of value to the multinational enterprise (MNE), whether from tangible benefits such as increased revenues or reduced costs, or from intangible benefits such as the acquisition of knowledge or competitive parity. Advances in telecommunications
*Srilata Zaheer is at the Carlson School of Management, University of Minnesota. Her researchinterests include issues of legitimacy, location and learning in MNCs. **Shalini Manrakhanis a doctoralstudent at the CarlsonSchool of Management.Herresearch interests include the international competitiveness of emerging marketfirms. JOURNAL OF INTERNATIONALBUSINESS STUDIES,
32, 4
(FOURTH QUARTER
2001): 667-686
667
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REMOTEELECTRONICACCESS AND LOCATION
and the emergence of global electronic networks, combined with the increasing role of information and digitized content in the value chain (Quinn, 1992), tend to weaken this link. This de-linking of physical location from value creation could transform the basic motivations of firms to locate activities in different parts of the world. In addition, the globally-networked economy creates potentially new ways in which firms can create and capture value (Brandenburger and Nalebuff, 1998), from being quick to respond to changes in the market a
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