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 19 th 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 O a and O t 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 of 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?