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The Role of Location in Competition

The Role of Location in Competition Journal of the Economics of Business, Vol. 1, No. 1, 1994 MICHAEL E. PORTER In the study of competition, the role of location has been all but absent. Most research on industry structure, the sources of competitive advantage, and compet- itive processes has been location-neutral. Treatments of location have largely followed the tradition established in the theory of trade. Here, locational choices and locational effects were based on an input cost minimization framework in which the principal attributes of location were the cost of land, labor, capital, energy, and the like. In this framework, locational choices were more of an operational detail than strategic. Once a firm decided how it was going to compete, cost minimizing locations for its various operations were then selected. More recently, there have been persistent assertions that even this modest influence of location is diminishing. As modern technologies of transportation and communications proliferate and diffuse, and as artificial regulatory separations between locations are reduced (for example, through reductions in trade barriers or liberalization of financial markets), it has been widely recognized that the connection between location and input cost minimization weakens. Companies can access inputs via efficient, global markets, or locate discrete activities in http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of the Economics of Business Taylor & Francis

The Role of Location in Competition

The Role of Location in Competition

International Journal of the Economics of Business , Volume 1 (1): 6 – Jan 1, 1994

Abstract

Journal of the Economics of Business, Vol. 1, No. 1, 1994 MICHAEL E. PORTER In the study of competition, the role of location has been all but absent. Most research on industry structure, the sources of competitive advantage, and compet- itive processes has been location-neutral. Treatments of location have largely followed the tradition established in the theory of trade. Here, locational choices and locational effects were based on an input cost minimization framework in which the principal attributes of location were the cost of land, labor, capital, energy, and the like. In this framework, locational choices were more of an operational detail than strategic. Once a firm decided how it was going to compete, cost minimizing locations for its various operations were then selected. More recently, there have been persistent assertions that even this modest influence of location is diminishing. As modern technologies of transportation and communications proliferate and diffuse, and as artificial regulatory separations between locations are reduced (for example, through reductions in trade barriers or liberalization of financial markets), it has been widely recognized that the connection between location and input cost minimization weakens. Companies can access inputs via efficient, global markets, or locate discrete activities in

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References (7)

Publisher
Taylor & Francis
Copyright
Copyright Taylor & Francis Group, LLC
ISSN
1466-1829
eISSN
1357-1516
DOI
10.1080/758540496
Publisher site
See Article on Publisher Site

Abstract

Journal of the Economics of Business, Vol. 1, No. 1, 1994 MICHAEL E. PORTER In the study of competition, the role of location has been all but absent. Most research on industry structure, the sources of competitive advantage, and compet- itive processes has been location-neutral. Treatments of location have largely followed the tradition established in the theory of trade. Here, locational choices and locational effects were based on an input cost minimization framework in which the principal attributes of location were the cost of land, labor, capital, energy, and the like. In this framework, locational choices were more of an operational detail than strategic. Once a firm decided how it was going to compete, cost minimizing locations for its various operations were then selected. More recently, there have been persistent assertions that even this modest influence of location is diminishing. As modern technologies of transportation and communications proliferate and diffuse, and as artificial regulatory separations between locations are reduced (for example, through reductions in trade barriers or liberalization of financial markets), it has been widely recognized that the connection between location and input cost minimization weakens. Companies can access inputs via efficient, global markets, or locate discrete activities in

Journal

International Journal of the Economics of BusinessTaylor & Francis

Published: Jan 1, 1994

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