Abstract
AbstractResearch summaryInternational connectivity is a multidimensional construct that plays a pivotal role in attracting the activities of multinational enterprises (MNEs) by facilitating intra‐firm coordination and access to external resources. We conceptualize how the different dimensions of international connectivity determine the location of MNEs' knowledge‐intensive activities, with a focus on Research and Development (R&D) laboratories and Headquarter units (HQ). By analyzing 3,101 greenfield investments of MNEs in US Metropolitan Statistical Areas, we show that R&D activities are attracted toward areas connected to the rest of the world by international networks of inventors. Moreover, we find that infrastructures which ensure the mobility of people across borders, and greater connectivity through advanced producer services are key location factors for HQ activities.Managerial summaryThe choice of where multinational enterprises (MNEs) locate their knowledge‐intensive activities is a crucial decision for managers, with important implications for policymakers. It has become increasingly clear that MNEs value the extent to which individual locations are connected globally. We study this international connectivity and highlight that it is a multidimensional construct spanning knowledge, infrastructure, and producer service networks. This study shows that not every dimension of international connectivity is equally important for MNEs in locating different knowledge‐intensive activities. Research and Development laboratories are attracted toward areas connected worldwide by international networks of inventors. Moreover, headquarter units are more likely to be established in locations featuring greater connectivity through the mobility of people and advanced producer services.
Highlights
Multinational enterprises' (MNEs) location choices continue to attract the attention of scholars, managers, and policymakers
Agglomeration economies generally have a positive effect on the attractiveness of an Metropolitan Statistical Areas (MSA) to multinational enterprises (MNEs) investments, the evidence suggests the possibility of congestion costs kicking in after a certain level of agglomeration economy
The results highlight that MNEs investments in a certain type of activity tend to be attracted toward MSAs where MNEs have invested in the same activity in the past (Alcacer & Delgado, 2016; Basile et al, 2008; Castellani & Lavoratori, 2020; Lavoratori et al, 2020)
Summary
Multinational enterprises' (MNEs) location choices continue to attract the attention of scholars, managers, and policymakers (for recent literature reviews see Kim & Aguilera, 2016; Nielsen, Asmussen, & Weatherall, 2017). Locations at different subnational levels have become increasingly active in attracting the activities of foreign MNEs (e.g., Beugelsdijk & Mudambi, 2013; Goerzen, Asmussen, & Nielsen, 2013), endeavoring to leverage their distinctive resource endowments to match specific firm-level requirements. Among the different spatial features that have gained importance as drivers of MNE location choices, scholars have recently underscored the key role of international connectivity (Asmussen et al, 2019; Belderbos et al, 2017a; Goerzen et al, 2013; Ma, Delios, & Lau, 2013). It is—by its very nature—a multidimensional construct, and each location features a different mix of international connectivity components While such components may be reasonably intertwined, they have different characteristics, which are likely to attract specific MNE activities
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
