|
...high-technology centers, incubators, "technopolis" communities has highlighted the need to more fully understand the driving forces behind this growth (e.g., Tamasy 2007; Drejer 2005; Lofsten and Lindelof 2003; Stuart and Sorenson 2003; Biggiero 2002; Preer 1992). One important factor impacting the competitive strategies and location decisions of both high-technology and traditional manufacturing firms is the development of flexible, modular, and cluster-based manufacturing technologies (Small 2007; Dasci 2005; Galbraith and DeNoble 2002; Wadhwa and Rao 2000; Boyer 1999; Boyer et al. 1997; Dean and Snell 1996). These advances have allowed some manufacturing firms, particularly small to medium-sized technology-based enterprises, to become much more fluid in their location decisions, thus freeing them of encumbering long-term commitments to a particular site or region (Galbraith and DeNoble 1995; McDonald 1986). Like any other business investment, the flexibility of production switching with low change-over costs, as well as the ability to quickly shift operations between diversified locations, each with varying input cost structures and output distribution benefits, now provides a valuable location-related real option (Nembhard, Shi, and Aktan 2005; Wu and Lin 2005; McGrath and MacMillan 2000; McGrath 1997; Lei, Hitt, and Godhar 1996). Not surprisingly, many technologically advanced manufacturing companies report that they regularly reevaluate the merits of their existing location networks as part of an ongoing, dynamic planning process rather than assuming location to be primarily a depreciated fixed asset (MacCormack, Newman, and Rosenfeld 1994).
The ability of an organization to refocus or relocate all or part of its operations within a relatively short timeframe has elevated the importance of the location issue not only as a component of competitive strategy, but also as a way to understand the rapidly changing industrial constituencies of various communities (Alcacer and Chung 2007; Cumbers, Mackinnon, and Chapman 2003; Vereecke and van Dierdonck 2002; Ginsberg, Larsen, and Lomi 2001; Ferdows 1997a; Lei, Hitt, and Godhar 1996; Bartmess et al. 1994; Kogut and Kulatilaka 1994; Galbraith and DeNoble 1992; DeMeza and Van der Ploeg 1987). Following this line of research, the purpose of this study is to investigate whether significant linkages exist between selected aspects of manufacturing and competitive strategy and related infrastructure requirements at both the regional- and site-specific levels of analysis.
Literature Review
Early approaches to understanding industrial development and location decision-making are rooted in Weber's (1929) neoclassical assumption that the maximization of owner wealth is critical to the location decision of manufacturing facilities. Since Weber's work, early location and regional development economic theory expanded on the notion of "agglomeration," where firms were believed to cluster in regions primarily because of demand and supply considerations (e.g., Goodman and Bamford 1989). More recently, as in the case of the first-generation high-technology centers of California's Silicon Valley and Boston's Rte. 128, interest has switched to the influence of intellectual resources, social, and venture capital networks to explain agglomeration tendencies (e.g., Alcacer and Chung 2007; Drejer 2005; Cumbers, Mackinnon, and Chapman 2003; Sorenson 2003; Stuart and Sorenson 2003; Suarez-Villa 2002; Baptista 1996; Saxenian 1994 1991; Jarboe 1986; Malecki 1984; Dorfman 1983). With the rise of second- and third-generation technology centers, research studies have started investigating the influence of factors related to more ambience and personal lifestyle issues (e.g., Baptista 1996; Gripaios et al. 1989; Hall et al. 1987; Schmitt et al. 1987; Jarboe 1986; Galbraith 1985).
While the agglomeration line of regional development research has contributed greatly to our understanding of location decisions, this approach still contains many of the neoclassical, "black-box" views of the firm by assuming relatively homogeneous firm-specific strategic content (Jaffe, Trajtenberg, and Henderson 1993; Krugman 1991). It was Schmenner (1982), however, who explicitly argued that plant location decisions should be understood within the context of a firm's dynamic corporate strategy rather than as a simple cost-function. This foundation has led some researchers to argue for a more strategic-oriented, transaction cost analysis of location decisions and entrepreneurial clustering (McCann, Arita, and Gordon 2002).
Though recognizing the potential for differences in location behavior, the vast majority of empirical research still implicitly assumes that high-technology firms are essentially homogeneous in their location strategies, thus commonly pooling data either by sector or size for analysis while ignoring other firm-specific characteristics. However, there is increasing evidence of significant differences in spatial tendencies among firms even within the same industrial sector. Accordingly, several more sophisticated frameworks have been offered that purport to shed light on high-technology location behavior. One important early approach is the spatial application of product life cycle theory, where the stage of product maturity is argued to affect location requirements (Begg and Cameron 1988; Galbraith and DeNoble 1988; Malecki 1981). Country culture and preferences also appear as possible determinants of high-technology location behavior (Nohria and Ghoshal 1994; Haigh 1990), as does plant mission and operational strategy (Ketels 2005; Vereecke and van Dierdonck 2002; Brush, Maritan, and Karnani 1999; Khurana and Talbot 1998; Ferdows 1997b; Galbraith and DeNoble 1995). Recent explorations have also examined the role of the social capital embedded in entrepreneurs' networks of relationships as a possible determinant of co-location patterns in high-technology industries (Stuart and Sorenson 2003).
In addition, location requirements vary by the level of geographical analysis (Badri, Davis, and Davis 1995; Schmenner 1982). One decision typically deals with the regional area (e.g., county or state) or a limited set of areas typically beyond a normal commuting distance, whereas another focuses on the actual site, industrial center, or research park. It is often the complex packaging of these two considerations, regional and site specific, that leads to the final location decision.
A line of research has also suggested that technology content is important in understanding location decisions (Barrios, Gorg, and Strobl 2006; Ketels 2005; Meijboom and Vos 1997; Markusen, Hall, and Glasmeier 1986) and has been argued by some to be the most appropriate framework (Taylor 1987). Within the context of location decisions, previous studies have typically defined technology content as R & D investment; however, the argument can also be equally applied to process technology. Specifically, manufacturing systems can be measured on a variety of levels, including their flexibility (i.e., providing the ability to quickly switch production between multiple products) and modularity (i.e., represented by a series of stand-alone technologies (e.g., in production cells) versus a single interrelated, nonseparable process).
These developments actually have two important theoretical impacts on location behavior. First, as discussed earlier, firms with flexible and/or modular systems may no longer consider their facility a fixed asset but rather a discretionary asset that can be quickly altered as competitive and technological pressures demand. This allows firms to more "thinly slice" their co-location decisions by having multiple sites, each one appropriate for a specific value-adding activity (Ricart et al. 2004). Second, just as the flexible nature of today's high-technology manufacturing processes encourages the integration of location decisions into a corporation's competitive strategy, it also provides a powerful incentive for certain types of strategies that can be particularly important for Small and Medium-Sized Enterprises (SMEs) (Marri, Irani, and Gunasekaran 2007). For example, a strong theoretical argument for the...
NOTE: All illustrations and photos
have been removed from this article.
More articles from Journal of Small Business Management
Hispanic immigrant entrepreneurs in the Las Vegas metropolitan area: m..., April 01, 2008
Looking for additional articles?
Search our database of over 3 million articles.
Looking for more in-depth information on this industry?
Search our complete database of Industry & Market reports by text, subject, publication
name or publication date.
About Goliath
Whether you're looking for sales prospects, competitive information, company
analysis or best practices in managing your organization,
Goliath can help you meet your business needs.
Our extensive business information databases empower business
professionals with both the breadth and depth of credible,
authoritative information they need to support their business
goals. Whether it be strategic planning, sales prospecting,
company research or defining management best practices -
Goliath is your leading source for accurate information.
|
