Cities and International Entrepreneurship: Toward An Integration of - - PowerPoint PPT Presentation

Cities and International Entrepreneurship: Toward An Integration of International Business, Economic Geography and Urban Economics Perspectives

Gary Cook University of Liverpool Management School 19th Uddevalla Symposium, 30 June – 2 July, 2016, Birkbeck College

Session Outline

• Motivation
• Commonalities, Complementarities and

Tensions

• Key Insights of Economic Geography,

International Business and Urban Economics

• Key Propositions
• Conclusions and Implications

A Quick Primer/Refresher on International Entrepreneurship

• Oviatt & McDougall (2004), JIBS

– Toward a Theory of International New Ventures

• Adaptation of the Eclectic Paradigm

– Internalization – All Organizations Internalize Some Transactions

• Neglect Influence of Location on The Relative Costs and

Benefits

– Hybrid Governance Structures Between Pure Market Exchange and Pure Managerial Control

• Weak on When Each Will Be Used

– Foreign Location Advantages

• Confuse Demand Side and Supply Side
• Completely Neglect the Question of Choice of Exploitation

Mode

– Unique Resources (and Dynamic Capabilities)

• Rephrasing of Dunning’s Oa and Ot Advantages

Motivation

• “Clusters” Coming Into Mainstream in International

Business and Entrepreneurship

– Little At The Interface of Clusters, IB and Entrepreneurship – International Entrepreneurship Has Been Largely Aspatial

• Cities Long Seen as Important Spaces in Economic

Geography

– Only Recently Starting to Feature in International Business

• Clusters, Cities and Entrepreneurship

– Strong Clusters Promote Firm Growth of Firms In The Same Line

• f Activity

– Strong Clusters Promote Surviving Entry in Related Lines of Activity – Spin-Offs and New Firms Benefit Substantially from Social Capital and Complementary Assets/Resources – A Strong London Effect Is Very Evident

• Clusters, Cities and International Entrepreneurship

– Strong Clusters Promote Internationalisation – Idiosyncratic Firm Effects Matter

Some Key Differences Between Economic Geography (EG) & International Entrepreneurship (IE)

• EG Has A Stronger Rooting in Sociology, IB in Economics

– Fundamental Differences Regarding Epistemology

• EG Places Much More Importance on Uneven Development

and Its Implications

– Creation of Urban Underclasses – Stronger Influence of Marxist/Marxian Thought

• More Critical Perspective
• EG Has A More Sophisticated Conception of Space & Place

(McCann & Mudambi, 2005)

– Implications of Processes At A Variety of Spatial Scales on Local Outcomes (Continuum, Not Russian Dolls – Dicken&Malmberg) – Space of Places versus Space of Flows – Stronger Emphasis on the Particularity of Locations

• IB/IE Has A More Sophisticated Conception of the Firm

– More Sophisticated View on Internal Processes of Management – More Sophisticated View of Competition and Strategy – Stronger Emphasis on the Particularity of Firms – Stronger Emphasis on Regularities

• Michael Porter?

Significant Literatures in EG

• What Makes Certain Places Privileged Locations
• World Cities
• The Relational Turn (Boggs & Rantisi, 2003)

– Connectivity Key, More So Than Spatial Scale

• The Regional World (Regions Key Nodes, Not Nation States)

– Strong Link to IB&IE Themes of Dynamic Capability & Innovation – Storper (1997) Holy Trinity of Technology, Organization and Territories

• Key Regions are City Regions
• Regions As Stocks of Physical and Relational Assets
• Face to Face Contact, Learning and Innovation
• MNEs/Technological Enterprises Key Actors (Florida, 1995)
• Creative Class

– Key Is To Attract High Quality Labour (Florida, 2002; Hall, 2000)

• The Evolutionary Turn (Boschma, 2013)

– Concerned with the Long-Term Evolution of Regions

• Cities Make A Sporadic Appearance

– Linked to Firms through Location Decisions – Spin-Offs Central To Agglomeration (Klepper, 1996, 2001) – Tackles The Question of Which New Ventures Succeed and Why

Cities in IB Research

• Rugman & Verbeke

– Shift from FSAs & CSAs to SSAs and RSAs

• Goerzen et al. (2013) Global Cities and Location Strategy

– Unit of Analysis The Global City-Region – Classify Global Cities Using Beaverstock et al. (1999) – Global Cities Loci of Influence and Global Connectedness – Appeal to Sassen Regarding Importance of Business Services – “Consumer City” As A Magnet for Talent (Glaeser – Urban Economics) – Key Sources of Liability of Foreignness May Be Lower in Global Cities (Complexity, Uncertainty, Discrimination) – Privileged Sites for Production and Innovation May Lie Outside Global Cities – Market-Seeking & Information-Seeking More Likely to Seek A Central Location, Production the Wider Metropolitan Area

• Emerging Literature on Relocation of (Mainly) Regional

HQs

Insights from Urban Economics

• Much Higher Level of Theoretical and Econometric Rigour
• Spatial Equilibrium Concept Central (Glaeser & Gottlieb, 2009)

– Labour Market Equilibrium; Housing Market Equilibrium; Migration Equilbrium

• Localization and Urbanization Economies Common Ground with

Other Approaches (Glaeser et al., 1992; Henderson, 1996)

• Key Fact Is Positive Correlation Between City Size and Productivity

– May Invest in Productive Infrastructure – Untraded Assets May Explain The Persistence of City Hierarchies

• Skills, Human Capital and Ideas Particularly Important

– Finer Division of Labour – Higher Human Capital and More Valuable Ideas Linked (Black & Henderson, 1999) – Important Innovations Associated with Small Numbers of Geographically Proximate Inventors – Links To IB&IE Themes of Strategic Assets and Location-Specific Advantage – Links with IB&IE Themes Regarding Dispersal of Innovation Activity

Clusters, Cities and International Entrepreneurship

• There Is A Symbiotic Relationship Between Cluster Strength and

Entrepreneurship

– Small Firms Rely On Local Complementary Assets/Resources Including Knowledge – Small Firms Benefit From Support Networks, “Patient Capital” and A High Trust Environment – New Firms, Including Spin-Offs, Important To Cluster Dynamics

• Firms Differ In Ability To Benefit from Externalities which Translates

into Different Growth Rates and Different Degrees of Internationalisation

– EG/Cluster Theory Relatively Silent On This – Firms Differ In Resource Strength – Important In International New Venture Literature – Uppsala Model Sees Necessary Knowledge/Resources Being Accumulated Over Time – City Locations Better Able To Provide Shortcuts

• Strong Cities Promote Internationalisation As They Contribute to

Competencies, Promote Entrepreneurship and Provide Access to International Networks

– Dynamic Cities/Clusters Help Build “Ownership Advantages” – International Connectivity Builds Cluster Strength

• Innovation Flows, Human Capital Flows

– Strong Clusters Often Typified By Dense Networking

Conclusions and Implications

• Cities Are Important Nodes of Connectivity in Global

Economy

– Importance Linked to the Hierarchy of Cities

• MNEs Are Key Actors
• Cities Are Fertile Breeding Grounds for Innovation and

Entrepreneurship

– Microprocesses Matter – International Connectivity Matters

• International Entrepreneurship Flourishes in Highly

Connected Cities

• Much Further Research Is Needed

– Relative Importance of Firm-Specific and City/Cluster-Based Advantages – How Do Entrepreneurs Discover and Exploit International Opportunities? – How Do Firms Benefit from Their International Activities? – What Is The Relationship between MNEs and HTSF/KIBS?