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.     

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.     

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.     

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.     

Spatial diversity in invention: evidence from the early R&D labs

This article uses historical data on inventor and firm researchand development (R&D) lab locations to examine the technologicaland geographic structure of corporate knowledge capital accumulationduring a formative period in the organization of United Statesinnovation. Despite the localization of inventive activity aroundthe labs, one-quarter of inventors lived outside a 30 mile commutingradius of the nearest facility of the firm they assigned theirpatents to. A strong positive effect of distance from a labon technological importance is identified, especially for inventorsfrom large cities that were geographically separated from afirm's; labs. A patent case–control method helps explainspatial sourcing by showing that the average quality of externallyavailable inventions was high. Firms selected complementary,not substitute, inventions from non-lab urban locations, suggestinga link between the organization and the geography of innovation.     

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.     

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.     

'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 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.     

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.     

Does size of local labour markets affect wage inequality? a rank-size rule of income distribution

The questions addressed in this paper are: (i) does wage inequalityincrease with local population size, and if so, (ii) what arepossible factors behind this increase? In a cross-section analysisof Swedish local labour markets using unique full populationdata, the article shows that urban scale, i.e. size of localpopulation, has significant positive effects on wage inequality.Testing for potential explanations, labour market diversification,human capital, migration, age structure and employment are shownto be significantly associated with inequality. Given theseeffects, the article raises the question of how to understandand incorporate scale effects into models of long-term changein wage inequality.     

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.     

Rethinking the regional knowledge production function

The knowledge production function is a questionable device foridentifying the determinants of commercial patenting. Adaptedfrom firm level analysis, it implicitly assumes that some mechanismexists to transfer research and development inputs across institutionsto maximize invention output. Augmenting the approach with regionalstructure variables risks confounding causes and effects, becausethese conditions determine research and development in the firstplace. We contrast a knowledge production function and a regionalstructure model to identify the determinants of commercial patentingin US states in the period 2002–2004. Results show thathuman capital, specialized knowledge flows, urbanization andindustry dominance in technical advance drive commercial patenting.     

Strategy as practice: interactive governance spaces and the corporate strategies of retail transnationals

There is growing interest in the role of corporate governancesystems within the strategy-making process of firms. Using a‘strategy as practice’ perspective, we conceptualizethe governance system as a contested space in which managementand security analysts mutually adapt/transform and enact corporatestrategies vis-à-vis argumentation. Synthesizing thismicropractice perspective within corporate governance research,the supple role of securities analysts’ arguments in shapingcorporate strategies assumes a new significance. It also providesa basis for observing and understanding the contested natureof the retail internationalization process. The implicationsand opportunities for management studies and economic geographyare considered.     

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.     

Value chains, networks and clusters: reframing the global automotive industry

In this article, we apply global value chain (GVC) analysisto recent trends in the global automotive industry, with specialattention paid to the case of North America. We use the threemain elements of the GVC framework—firm-level chain governance,power and institutions—to highlight some of the definingcharacteristics of this important industry. First, nationalpolitical institutions create pressure for local content, whichdrives production close to end markets, where it tends to beorganized nationally or regionally. Second, in terms of GVCgovernance, rising product complexity combined with low codifiabilityand a paucity of industry-level standards has driven buyer–supplierlinkages toward the relational form, a governance mode thatis more compatible with Japanese than American supplier relations.The outsourcing boom of the 1990s exacerbated this situation.As work shifted to the supply base, lead firms and supplierswere forced to develop relational linkages to support the exchangeof complex uncodified information and tacit knowledge. Finally,the small number of hugely powerful lead firms that drive theautomotive industry helps to explain why it has been so difficultto develop and set the industry-level standards that could underpina more loosely articulated spatial architecture. This case studyunderlines the need for an open, scalable approach to the studyof global industries.     

Exploring evolutionary economic geographies

Evolutionary approaches in economics have gathered increasingsupport over the last 25 years. Despite an impressive body ofliterature, economists are still far from formulating a coherentresearch paradigm. The multitude of approaches in evolutionaryeconomics poses problems for the development of an evolutionaryeconomic geography. For the most part, evolutionary economicgeography imports selective concepts from evolutionary biologyand economics and applies those concepts to specific problemswithin economic geography. We discuss a number of problems withthis approach and suggest that a more powerful and appealingalternative requires the development of theoretically consistentmodels of evolutionary processes. This article outlines thecontours of an evolutionary model of economic dynamics whereeconomic agents are located in different geographical spaces.We seek to show how competition between those agents, basedon the core evolutionary principles of variety, selection andretention, may produce distinct economic regions sharing propertiesthat differentiate them from competitors elsewhere. These argumentsare extended to illustrate how the emergent properties of economicagents and places co-evolve and lead to different trajectoriesof economic development over space.     

Localized mobility clusters: impacts of labour market externalities on firm performance

This article analyses the impact of labour market-induced externalitieson firm performance by using a unique database that connectsattributes of individuals to workplaces for the entire Swedisheconomy. Based on the analysis of 256,985 workplaces, our resultsshow that firms belonging to networks of local job mobility(i.e. ‘localized mobility clusters’) significantlyoutperform other similar firms within the local labour market.The results also indicate that concentrations of similar andrelated firms do not explain any considerable part of the variationsin firm competitiveness. Labour market externalities derivedvia local job mobility produce significantly more powerful effectsfor the involved firms as compared to the degree of co-location,diversity and scale.