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Location Decisions and Agglomeration Economies: Domestic and Foreign Companies

Author

Listed:
  • Claver-Cortés, Enrique

    (University of Alicante)

  • Marco-Lajara, Bartolome

    (University of Alicante)

  • Manresa-Marhuenda, Encarnación

    (University of Alicante)

  • García-Lillo, F.

    (University of Alicante)

  • Seva-Larrosa, Pedro

    (University of Alicante)

Abstract
The international expansion of multinational enterprises (MNEs) is one of the topics most frequently discussed amongst international business scholars. In particular, decisions regarding firm location and its effects on performance have received great attention. The results obtained in the study about this relationship are inconclusive, though, since a large number of studies have been conducted from very different perspectives. One of these perspectives suggests that the location in agglomerations allows MNEs to benefit from potential knowledge spillovers encouraging innovation and local adaptation. However, this co-location increases the risk of imitation by domestic companies as well. Furthermore, the acquisition by each firm of the external knowledge generated by means of concentration depends on its internal capabilities, and especially on its absorptive capacity. The aim sought with this work consists in analyzing the location decisions adopted by MNEs in an attempt to clarify the following issues: Are MNEs more likely to be established in agglomerations? Which companies benefit the most from geographical proximity in terms of innovation, domestic or foreign ones? What is the role of absorptive capacity? The results obtained in the analysis, carried out with a sample of firms and using data from a survey conducted in 2013 by PITEC, reveal the differences between foreign and local companies when it comes to using external knowledge.

Suggested Citation

  • Claver-Cortés, Enrique & Marco-Lajara, Bartolome & Manresa-Marhuenda, Encarnación & García-Lillo, F. & Seva-Larrosa, Pedro, 2017. "Location Decisions and Agglomeration Economies: Domestic and Foreign Companies," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 39, pages 99-135.
    • Handle: RePEc:ris:invreg:0358
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    More about this item

    Keywords

    location choice; multinational enterprise; innovation; agglomeration; knowledge; absorptive capacity;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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