Oligopoly and the structural paradox of retail TNCs: an assessment of Carrefour and Wal-Mart in Japan

This research focuses on the case of international chains facingsignificant competition from domestic chains in advanced industrializedeconomies. In this article, I question the assumptions behindthe perceived, simultaneous process of globalization and retailconcentration by taking the cases of the world's two largestretailers, Wal-Mart and Carrefour, entering the Japanese marketin the early 2000s. Both retail TNCs have so far failed to meetinitial high expectations for their performance. I argue thatthere is a structural paradox inherent among retail TNCs, whichis expressed as contradictory forces between standardizationand localization. Empirical evidence is provided on how theseforces complicate retail TNCs’ front-end (store-front)and back-end (distribution) operations in the case of Japan.Emphasis is placed on the role of oligopoly in the retail sectorand how its absence affects retail TNCs’ operation inforeign markets.     

Host economy impacts of transnational retail: the research agenda

The last decade has witnessed an acceleration of retail foreigndirect investment into a range of emerging markets across EastAsia, Central and Eastern Europe and Latin America, led by asmall cohort of food and general merchandise retailers fromWestern Europe, and to a lesser extent, North America. Whilethese investment flows have had profound developmental impactsin host economies, research in this area is still in its infancy.This article therefore maps out a detailed research agenda withrespect to the host economy impacts of transnational retailing.After setting the scene empirically and conceptually, the articleconsiders different dimensions of these impacts on retail competitiveness,supply chain dynamics, consumption practices and consumer/civilsociety, institutional and regulatory frameworks and, reciprocally,on the retail transnational corporations themselves. It concludesby calling for a concerted interdisciplinary research effortinto this important and understudied aspect of economic globalization.     

Barriers to 'US style' lean retailing: the case of Wal-Mart's failure in Germany

Wal-Mart's exit from the German market in 2006 after 10 yearsof attempting to achieve sustainable competitive advantage contributesan interesting case to the small but expanding literature on‘failure’ in international investment. The workon the disinvest decision in all its forms has been criticalto a re-conceptualization of the international investment processas dynamic rather than static, linear and inexorable. An importantsegment of the work on investment and disinvestment as dynamicprocesses focuses on the environment in which investment anddisinvestment decisions evolve. While the environment of thehost country market has begun to be examined, the market environmentof the country in which the retail transnational corporation(TNC) originates also affects the international disinvestmentprocess. To explore this ‘home country effect’,I examine the resources Wal-Mart brought into the German marketand their ability to use those resources in the German context.Wal-Mart's resources were shaped by the market governance regimein which the firm evolved, and not insignificantly, over whichit had and has influence. Within this theoretical frame, Wal-Mart'sreliance on the resources of network dominance and autonomousaction that made for its success in the USA contributed to unsuccessfulstrategies in the German retailing market.     

Organisational geographies of corporate responsibility: a UK-US comparison of retailers' ethical trading initiatives

Ethical trade, involving corporate codes of conduct for sitesof production, has become a key means through which labour inretailers’ global supply chains is regulated. Yet, thereis evidence to suggest that retail corporations vary markedlyin their approaches to ethical trade and that such variationis shaped, in part, by the national-institutional contexts inwhich retailers are based. This article explores this insightby evaluating the distinct roles played by multi-stakeholderinitiatives for ethical trade in the UK and USA. While the UK'score multi-stakeholder initiative, the Ethical Trading Initiative(ETI), encompasses retailers from a variety of sectors and takesa developmental and continuous learning approach to ethicaltrade, the US multi-stakeholder initiatives are focussed moreon corporate accountability based on compliance monitoring exclusivelyin the clothing sector. Given recent organisational attemptsto foster transnational dialogue between multi-stakeholder initiatives,though, we argue that the precise ways in which national-institutionalcontexts shape retailers’ ethical trading approaches arefluid and mutable. We contribute to the literature on the governanceof global supply chains, retailer power and corporate responsibilityby emphasising the political significance of national-institutionalenvironments. However, in line with notions of relational economicgeography, we understand these national-institutional environmentsas active and dynamic contexts, and accentuate the coalitionalways in which nationally based organisations evolve in theirhome countries and go on to shape broader transnational agendasfor ethical trade.     

Scoping and conceptualising retailer internationalisation

The impacts and activities of international retailers have beenlargely ignored in the globalisation discourse. A possible reasonfor this is the absence, in international retailing, of conceptand theory that does not hang on the coat-tails of internationalproduction. The paper attempts to consider international retailingin its own right. Three linked questions are explored. Has theinternationalisation process of the large retailers resultedin an increase in the global concentration of sales? In whatways does the process of retailer internationalisation differfrom the internationalisation of production? What does the committedinternational retailer transfer to the host country during theinternationalisation process?     

A theoretical framework for evolutionary economic geography: industrial dynamics and urban growth as a branching process

We propose a framework that specifies the process of economicdevelopment as an evolutionary branching process of productinnovations. Each product innovation provides a growth opportunityfor an existing firm or a new firm, and for an existing cityor a new city. One can then obtain both firm size and city sizedistributions as two aggregates resulting from a single evolutionaryprocess. Gains from variety at the firm level (economies ofscope) and the urban level (Jacobs externalities) provide thecentral feedback mechanism in economic development generatingstrong path dependencies in the spatial concentration of industriesand the specialization of cities. Gains from size are also expected,yet these are ultimately bounded by increasing wages. The contributionof our framework lies in providing a micro-foundation of economicgeography in terms of the interplay between industrial dynamicsand urban growth. The framework is sufficiently general to investigatesystematically a number of stylized facts in economic geography,while at the same time it is sufficiently flexible to be extendedsuch as to become applicable in more specific micro-contexts.A number of extensions related to the concepts of knowledgespillover and lock-in, are also discussed.     

Re-engaging with rationality in economic geography: behavioural approaches and the importance of context in decision-making

Behavioural approaches have become mainstream in economics,supported by the research of cognitive scientists and psychologists,yet their findings have attracted little attention from geographers.This article argues for a renewed behavioural economic geographythat builds on research in behavioural economics but also addressesone of its main shortcomings: a lack of engagement with thesocial context of decision-making. I outline a research agendathat bridges the gap between the disciplines in the area ofpension decision-making, using the example of choice in UK occupationalplans to argue for a mixed methodological approach to meet thechallenge of taking context seriously.     

'Proactive fast-tracking' diffusion of supermarkets in developing countries: implications for market institutions and trade

Supermarkets have spread extremely rapidly in developing countriesafter the ‘take-off’ in the early to mid-1990s.Former analyses of supermarket diffusion have not adequatelyexplained the sudden burst and then exponential diffusion ofsupermarkets in the late 1990s and early 2000s. We argue thatrather than taking demand and market institutional and organizationalconditions as ‘exogenous’, as former analyses havetended to do, modern food retailers instead have treated localconditions as substantially ‘endogenous’. To enabletheir rapid growth, supermarkets undertake ‘proactivefast-tracking strategies’ to alter the ‘enablingconditions’ of entry and growth. Beside the retail investmentsthat have been extensively treated in recent literature, theseproactive strategies focus on improving the ‘enablingconditions’ via (i) procurement system modernization and(ii) local supply chain development. One important strategyretailers have used to facilitate (i) and (ii) is to form symbioticrelationships with modern wholesale, logistics and processingfirms. An example we address is ‘follow sourcing’,where a transnational retailer encourages transnational logisticsand wholesale firms with whom the retailer is working in homemarkets, to locate to the developing country. This is a spurto globalization of services in support of retail. Follow-sourcinghas been treated for example in the automobile manufacturessector (follow-sourcing from spare parts manufacturers)—butnot in the food sector. A second important strategy is thatof multi-network-sourcing, in which supermarkets source fromnational, regional and global networks. We analyze that strategyhere, adding to the literature which to date has touched onthis theme only scantly, and for the first time identify typicalpaths, present preliminary evidence (from Central America andIndonesia) concerning this multi-sourcing-network strategy anddiscuss trade implications. One of these is the move to primacyof South–South trade in supermarket sourcing—a newdimension of globalization. By introducing this link of retailertransformation and trade into the literature, we hope to spura new line of research that is timely in light of the trade,development and globalization debates in developing countries.     

The far side of international business: local initiatives in the global workshop

This article presents a case study of the entry of two Norwegianlifeboat companies into the Chinese production system. Ratherthan merely studying the situation through the eyes of thesecompanies, it includes a perspective from the far side of internationalbusiness, i.e., the local competitors. The article argues thatto understand the dynamics and development of both internationalcompanies and localized production systems in a global economy,it is necessary to explore how international and local actorsreflexively evaluate and act upon each other. The article, thus,presents a model for studying the internationalization processand localized production systems.     

The supermarket revolution in developing countries: tidal wave or tough competitive struggle?

An extensive literature on the transformation of food retailingin developing countries by the expansion of supermarkets hashighlighted the implications of the concentration of food valuechains for the continued incorporation of small farmers in freshproduce supply. A critical examination of this literature showsthat extent of the transformation of retailing, and also offood production as a consequence of it, is overestimated, particularlyfor fresh produce. The future landscape of food retailing willbe more varied than the supermarket revolution hypothesis predicts.     

Coevolution and coordination: a systemic analysis of the Taiwanese information technology industry

The ‘evolutionary turn’ in economic geography hasled to increasing emphasis on coevolution among technologies,organizations and territories. The weakness of this approach,however, is a focus on broad coevolutionary pictures that payslittle attention to coordination processes that guide interdependentactions on the ground. Using the Taiwanese information technologyindustry as an example, this article suggests an industrialsystem analysis that gives a structural coherence to a seriesof intentional, collective actions. Such a systemic measurehas the potential to extend the evolutionary analysis beyondbroad coevolutions to the strategic transformations of industrialorganizations.     

The effect of congestion and agglomeration on multifactor productivity growth in Dutch regions

It is well known that labour productivity growth in Europe isslowing down, against an increasing growth rate in the US. TheNetherlands is one of the countries in Europe with the lowestgrowth rates of productivity. This article looks at this phenomenonfrom a regional perspective and presents the results of a growthaccounting exercise applied to regional industry data of TheNetherlands between 1995 and 2002. We find that slow productivitygrowth in The Netherlands is particularly situated in the economiccore regions and is caused by slow multifactor productivity(mfp) growth. A substantial part of this slow mfp-growth canbe explained by the fact that positive agglomeration advantagesare overruled by negative congestion effects caused by trafficjams.     

On the origins of border effects: insights from the Habsburg Empire

What are the origins of border effects on trade and why do borderscontinue to matter in periods of increasing economic integration?We explore the hypothesis that border effects emerged as a resultof asymmetric economic integration in the unique historicalsetting of the multi-national Habsburg Empire prior to the FirstWorld War. While markets tended to integrate mainly due to improvedinfrastructure, ethno-linguistic networks had persistent tradediverting effects. We find that the political borders whichseparated the empire's successor states after the First WorldWar became visible in the economy from the mid-1880s onwards,already 25–30 years before the First World War. This effectof a ‘border before a border’ cannot be explainedby factors such as administrative barriers, physical geography,changes in infrastructure or patterns of integration with neighbouringregions outside of the Habsburg customs and monetary union.However, controlling for the changing ethno-linguistic compositionof the population across the regional capital cities of theempire does explain most of the estimated border effects.     

Urban growth drivers in a Europe of sticky people and implicit boundaries

We investigate urban GDP per capita growth across the EU12 usingdata for functionally defined cities—rather than administrativeregions. We test hypotheses on the role of human capital, EUintegration and fragmentation of urban government and explorespatial dependence and mechanisms of spatial interaction. Resultsare acceptable on standard econometric tests without measuresof spatial interaction but there is spatial dependence. If variablesreflecting spatial adjustment are included, they are statisticallysignificant and eliminate spatial dependence. Not only do theresults now provide consistent estimates of parameters, butthey also support relevant theoretical insights and show nationalborders are still significant barriers to economic adjustment.People in Europe are sticky so it is unreasonable to assumespatial disparities will disappear. Our findings also implythat cities in Europe form national rather than a single continentalsystem.     

Scales of regional income disparities in the USA, 1955 2003

This article examines multiple dimensions of regional per capitaincome disparities in the USA between 1955 and 2003 with a particularfocus on scalar effects. It combines various exploratory analyticaltools of spatial disparities, including inequality indices,mobility indices, kernel density estimation, spatial autocorrelationstatistics and scale variances, to analyse regional averageper capita income distributions at multiple spatial scales,ranging from counties to multi-state regions. The analysis revealspreviously unrecognised systematic patterns of cross-scalardynamics, whereby spatial income disparities are increasinglymore pronounced at smaller scales in the last few decades.     

Positional issues, valence issues and the economic geography of voting in British elections

A body of research has built up in recent years linking thechanging geography of party support in British elections tovariations in the country's economic geography. Consistent withthe economic vote model, government support has been shown tobe higher than average in affluent areas and lower than averagein poorer areas. However, the great majority of such studieshave concentrated on elections between 1979 and 1997, a prolongedperiod of one-party rule. This article argues that this meansexisting research cannot differentiate between the very differentpredictions of positional and valence approaches to economicvoting since both suggest identical outcomes during Conservativeadministrations. By contrasting a period of Conservative rulewith a period of Labour rule, however, the article providesa test of the competing claims of the positional and valencearguments for an understanding of Britain's electoral geography.     

Complexity thinking and evolutionary economic geography

Thus far, most of the work towards the construction of an evolutionaryeconomic geography has drawn upon a particular version of evolutionaryeconomics, namely the Nelson-Winter framework, which blendsDarwinian concepts and metaphors (especially variety, selection,novelty and inheritance) and elements of a behavioural theoryof the firm. Much less attention has been directed to an alternativeconception based on complexity theory, yet in recent years complexitytheory has increasingly been concerned with the general attributesof evolutionary natural and social systems. In this articlewe explore the idea of the economic landscape as a complex adaptivesystem. We identify several key notions of what is being calledthe new ‘complexity economics’, and examine whetherand in what ways these can be used to help inform an evolutionaryperspective for understanding the uneven development and adaptivetransformation of the economic landscape.     

Myopia, knowledge development and cluster evolution

This article aims to show how processes of knowledge developmentand their institutional underpinnings make up the core of evolutionaryeconomic geography. We argue that micro level concepts—notablyinnovation, selection and retention—provide insights thatcan be helpful also when investigating evolutionary processesof knowledge creation at the aggregate levels of cities, regionsor nations. We investigate the linkage between drivers, mechanismsand barriers to knowledge creation and acquisition at the micro-level,and the development over time and across spatial settings ofhigher-order phenomena of localized institutions and other capabilities.We apply this distinction on the analysis of the rise, growth,decline and possible rejuvenation of spatial clusters of similarand complementary economic activity.     

Global sourcing: insights from the global clothing industry the case of Zara, a fast fashion retailer

Until recently, Zara, a major international clothing retailerand pioneer of ‘fast fashion’ principles, kept almosthalf of its production in Spain and Portugal, earning the reputationof being one of the exceptions to globalization. Since the 1980s,the existence of such exceptions has been fueling an expectationthat the production of high-quality fashion garments and tailoredsuits would remain in the industrialized core. Here I revisitthis expectation in the light of the current seminal changein the culture of fashion from ready-to-wear to fast fashion,and report that the increased variety and fashionability associatedwith fast fashion, represented by Zara, have tilted the balanceof competitive advantage towards, rather than away from, firmsin partially industrialized countries. As a number of supplierfirms in countries such as Morocco, India and Turkey have gainedthe competence to manufacture intricately worked high-qualitygarments with the required flexibility and speed, Zara has turnedto sourcing from these countries. It appears that instead ofZara changing the geography of jobs, the geography of competenciesand jobs has changed Zara.     

Economic geography and the evolution of networks

An evolutionary perspective on economic geography requires adynamic understanding of change in networks. This article explorestheories of network evolution for their use in geography anddevelops the conceptual framework of geographical network trajectories.It specifically assesses how tie selection constitutes the evolutionaryprocess of retention and variation in network structure andhow geography affects these mechanisms. Finally, a typologyof regional network formations is used to discuss opportunitiesfor innovation in and across regions.