The Economies and Diseconomies of Industrial Clustering: Multinational Enterprises versus Uninational Enterprises

Naresh Pandit; Gary Cook; Feng Wan; Jonathan Beaverstock; Pervez Ghauri

doi:10.1007/s11575-018-0363-1

The Economies and Diseconomies of Industrial Clustering: Multinational Enterprises versus Uninational Enterprises

Naresh Pandit, Gary Cook, Feng Wan, Jonathan Beaverstock, Pervez Ghauri

Research output: Contribution to journal › Article (Academic Journal) › peer-review

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Abstract

This study’s objective is to compare cluster economies and diseconomies for multinational enterprises (MNEs) and uninational enterprises (UNEs) within the London financial services cluster. In contrast to the implicit assumption of the cluster participation literature that the economies and diseconomies of clusters are valued similarly by all firms, we find that economies relating to social capital and labour market pooling are equally important to MNEs and UNEs, economies relating to local competition and diseconomies relating to congestion costs are more important to MNEs than to UNEs, and economies relating to the reputational effects of locating in a world-leading cluster and access to specialised suppliers are more important to UNEs than to MNEs. That MNEs and UNEs do not experience cluster economies and diseconomies in the same way indicates that both cluster participation theory and international business theory need augmentation to recognise that cluster incumbents benefit and suffer from cluster membership differently.
Keywords: Clusters; Location; FDI; MNEs; UNEs; Financial Services.
JEL classification codes: F2, L2, 03, R3

Original language	English
Number of pages	33
Journal	Management International Review
Early online date	4 Sept 2018
DOIs	https://doi.org/10.1007/s11575-018-0363-1
Publication status	E-pub ahead of print - 4 Sept 2018

Research Groups and Themes

MGMT Strategy International Management and Business and Entrepreneurship

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title = "The Economies and Diseconomies of Industrial Clustering: Multinational Enterprises versus Uninational Enterprises",

abstract = "This study{\textquoteright}s objective is to compare cluster economies and diseconomies for multinational enterprises (MNEs) and uninational enterprises (UNEs) within the London financial services cluster. In contrast to the implicit assumption of the cluster participation literature that the economies and diseconomies of clusters are valued similarly by all firms, we find that economies relating to social capital and labour market pooling are equally important to MNEs and UNEs, economies relating to local competition and diseconomies relating to congestion costs are more important to MNEs than to UNEs, and economies relating to the reputational effects of locating in a world-leading cluster and access to specialised suppliers are more important to UNEs than to MNEs. That MNEs and UNEs do not experience cluster economies and diseconomies in the same way indicates that both cluster participation theory and international business theory need augmentation to recognise that cluster incumbents benefit and suffer from cluster membership differently.Keywords: Clusters; Location; FDI; MNEs; UNEs; Financial Services.JEL classification codes: F2, L2, 03, R3",

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AU - Pandit, Naresh

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AU - Wan, Feng

AU - Beaverstock, Jonathan

AU - Ghauri, Pervez

PY - 2018/9/4

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AB - This study’s objective is to compare cluster economies and diseconomies for multinational enterprises (MNEs) and uninational enterprises (UNEs) within the London financial services cluster. In contrast to the implicit assumption of the cluster participation literature that the economies and diseconomies of clusters are valued similarly by all firms, we find that economies relating to social capital and labour market pooling are equally important to MNEs and UNEs, economies relating to local competition and diseconomies relating to congestion costs are more important to MNEs than to UNEs, and economies relating to the reputational effects of locating in a world-leading cluster and access to specialised suppliers are more important to UNEs than to MNEs. That MNEs and UNEs do not experience cluster economies and diseconomies in the same way indicates that both cluster participation theory and international business theory need augmentation to recognise that cluster incumbents benefit and suffer from cluster membership differently.Keywords: Clusters; Location; FDI; MNEs; UNEs; Financial Services.JEL classification codes: F2, L2, 03, R3

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