Regional strategic assets and the location strategies of emerging countries’ multinationals in Europe

Abstract

This paper explores the location strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs) in search for regional strategic assets. The analysis is based on a systematic comparison between EMNEs and multinationals from advanced countries (AMNEs) in order to unveil similarities and differences between these two major sources of foreign investments into the regions of the European Union. The empirical results suggest that EMNEs follow a distinct logic in their location strategies because they are attracted by the availability of technological competences only when their subsidiaries pursue more sophisticated and technology-intensive activities. Conversely EMNEs share some behavioural similarities with AMNEs in their response to the spatial agglomeration of investments. The paper is organized as follows. The next section reviews the literature dealing with the location of MNEs, introducing the determinants analysed in the empirical analysis with special reference to the expected behavioural differences between AMNEs and EMNEs.Section 3 introduces the empirical strategy and the dataset. The empirical results are presented in Section 4. Section 5 concludes with some policy considerations. A FRAMEWORK FOR COMPARATIVE ANALYSIS: MNEs AND THEIR LOCATION DRIVERSThere is a widespread consensus in the literature that the understanding of the location behavior of MNEs is still underdeveloped. Referring to the Ownership-LocationInternalization (OLI) paradigm developed by Dunning (1977), the literature has dealt widely with the questions related to the why a firm becomes a multinational (O) and how it carries out its international adventure (I) but so far the discussion about where it goes to internationalize its activities (L) has remained rather fuzzy (Iammarino and McCann, 2013;McCann and Mudambi, 2005).

Global Investments and Regional Development Trajectories: The Missing Links

“…First, the share of developing and emerging economies on global FDI flows has grown steadily and, for the first time in history, accounted for more than half the world's total inflows in 2012 (55% in 2014), and more than one-third of total outflows in 2014, confirming a massive transformation in the geography of foreign investment worldwide (United Nations Conference on Trade and Development (UNCTAD), 2015), and in European regions in particular (Crescenzi, Pietrobelli, & Rabellotti, 2016c). Second, the majority of these cross-border flows span neighbouring economies, rather than being genuinely global transactions.…”

The Role of Manufacturing in Sustainable Economic Development: A Case of Guangzhou, China

“…Especially for multinational companies, the service outsourcing would bring more industrial cooperation and knowledge spillover where economic development could keep active growth. This positive localization strategy of enterprises is influenced by the regional asset and industrial environment which urban municipalities need to seriously consider [89].…”

The role of tax havens and offshore financial centers in Asia-Pacific networks: evidence from firm-subsidiary connections

“…For example, Australian MNCs have been found to strongly pursue locational strategies associated with the country's colonial links to the United Kingdom and geographic links to the Asia-Pacific (Kim, & Gray, 2017;Taylor et al, 2013). Meanwhile, technology-intensive MNCs from emerging economies seek to locate where there are knowledge competencies, given these are often weaker in their home economies (Crescenzi et al, 2016). Some MNCs seek access to particular markets.…”