Location and International Strategy Formation

Abstract

By now, it is generally accepted that the two key dimensions of international business (IB) strategy are location and control. Multinational enterprises (MNEs) must therefore decide where to locate their international operations and how to control their activities there. Virtually every research question associated with IB strategy is related to one or both of these dimensions. This chapter will focus on the location dimension, while recognizing that the control dimension is its ever-present complement. Historically, MNEs expanded into international locations in order to seek local, natural resources unavailable in their home countries. However, at present, it is the MNEs’ search for knowledge resources that dominates their location strategies. Over the last decade, the rise of global value chains (GVCs) has become one of the primary factors motivating scholars to integrate insights from IB and economic geography to develop a more holistic view of the location dimension of MNE strategy. We discuss the evolution of key intellectual ideas in the area of IB location strategies to then propose a future research agenda.