Innovation and Strategy in Space: Towards a New Location Theory of the Firm

Maryann P. Feldman and Aydan S. Kutay

Chapter 12 in Innovative Behaviour in Space and Time, 1997, pp 239-250 from Springer

Abstract: Abstract Traditional location theory suggests that individual firms freely scan the environment and select a location which minimizes production costs (see Garafola and Fogerty 1988). According to this theory, locational advantage reflects conventional natural advantages associated with land, labour and capital. Emphasis is given to production and specifically to the exploitation of economies of scale, but the theory does not accommodate the increased importance of innovation, or the ability to produce higher quality products. In order to engage in innovation, firms must coordinate a variety of activities both within their functional boundaries and with their external environments. An important dimension of innovation is product variety, which is defined as the adaptation of new products to specific market segments. Product variety becomes critical to competitive strategy in a global economy, as it offers firms a way to increase market share through improved time-to-market acceptance. Business strategists have focused on questions of coordination in an increasingly borderless world. Less attention however, has been paid to developing a locational theory which would consider the geographic organization of the firm’s activity. Location may offer firms an effective way to organize resources in light of the increased importance of product variety in innovation. In addition, such a theory should also consider the potential of new technologies in communication and production for altering locational dynamics and requirements.

Keywords: Foreign Direct Investment; Technological Change; Product Variety; Location Decision; Location Theory (search for similar items in EconPapers)
Date: 1997
References: Add references at CitEc
Citations: View citations in EconPapers (6)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:adspcp:978-3-642-60720-2_12

Ordering information: This item can be ordered from
http://www.springer.com/9783642607202

DOI: 10.1007/978-3-642-60720-2_12

Access Statistics for this chapter

More chapters in Advances in Spatial Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().