Location and the Global Advantage of Firms

• Published date: 01 February 2016
• DOI: http://doi.org/10.1002/gsj.1107
• Date: 01 February 2016

LOCATION AND THE GLOBAL ADVANTAGE

OF FIRMS

LUIZ F. MESQUITA*

W. P. Carey School of Business, Arizona State University, Tempe, Arizona,

U.S.A.

The goal of this article is to point to a research agenda framing the internationalization of firms

on theories of location—which is defined as positions of place, time, and space that engender

tacit sources of competitive advantage. Despite recent research merging location and interna-

tionalization theoretical models, much remains unknown, and future work is warranted to

respond to four fundamental questions: (1) why firms venture abroad;(2) how such motivations

shape FDI patterns; (3) how multinational firms shape the foreign environments they enter;

and (4) what resources and (dynamic) capabilities are involved in such a process. The specific

contributions of the articles to the research agenda are also highlighted here. Copyright ©

2016 Strategic Management Society.

INTRODUCTION

The quest for an ideal foreign market is at the heart of

the strategic management process of any firm ventur-

ing globally. If earlier literature saw the internation-

alization of the modern corporation as a function of its

product life cycle (e.g., Vernon, 1966), and the path

dependent progression of its foreign expansion expe-

riences and skills (e.g., Johanson and Vahlne, 1977),

or as a vehicle for foreign domestic investment (e.g.,

Buckley and Casson, 1976; Dunning, 1992), scholars

and practitioners increasingly have come to acknowl-

edge that locating in a foreign land is a decision that

also involves the firm’s transnational searches for

more assorted assets and other types of know-how

(Cantwell, 2009; Alcacer and Chung, 2007; Porter,

2000; Aharonson, Baum, and Feldman, 2007; Doner,

McKendrick, and Haggard, 2000; Henisz and Delios,

2001; Pe’er, Vertinsky, and King, 2008; Bartlett and

Ghoshal, 1992).

In this special issue, we frame the internationaliza-

tion process of firms through the lens of location

theories—defined loosely here as positions of place,

time, and space that engender tacit sources of advan-

tage—to better understand when, where, and why

firms expand abroad, choosing some countries in lieu

of others. Extant research on location has built strong

discipline-based foundations regarding both the

spatial organization of economic activity and the

sociological structures of networks that help explain

firm-level advantages. The logic in broad terms

explores how the concentration of buyers,sellers, and

know-how in specific locales facilitates transactions

and, in the process, broadens the opportunities

for denser trade, widens knowledge spillover, and

accelerates innovation cycles (see for example

Beugelsdijk, McCann, and Mudambi, 2010;

Beugelsdijk and Mudambi, 2013; McCann, 1995a,

1995b, 1996, 2011; Cantwell and Mudambi, 2005;

Cantwell, 2009; Porter, 1998).

Keywords: location; multinational; global; state-owned enter-

prise; FDI; competitive advantage

*Correspondence to: Luiz F. Mesquita, W. P. Carey School of

Business, Arizona State University, 300 E. Lemon St., Tempe,

AZ 85287, U.S.A. E-mail: mesquita@asu.edu

Global Strategy Journal

Global Strat. J.,

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/gsj.1107

Copyright © 2016 Strategic Management Society

6:3 12 (2016)

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