TITLE

The Effects of Location-Fixity and Local Embeddedness on the Value Creation of Utilities and Concession-based Firms

AUTHOR(S)
Kern-Ulmer, Annette Karoline
PUB. DATE
May 2011
SOURCE
University of St. Gallen, Business Dissertations;5/16/2011, p1
SOURCE TYPE
Dissertation
DOC. TYPE
Article
ABSTRACT
Location - in spite of increasing globalisation of economic activities - also in present times remains central to firms' success. While most firms have the freedom to choose or change their location, some face limitations to do so. Yet, previous research barely considered the effects of location-dependence in the field of organisation studies. In addition, research has paid little attention to the spatially immobile infrastructure sector, which is bound to a location for the long-term through significant sunk costs. This dissertation addresses both gaps. It aims to contribute - among others - to strategic management research by integrating a spatial dimension, and to enhance a firm-centric perspective in economic geography. More specifically, we address impacts of location-fixity on firms' value creation with a focus on infrastructure-heavy firms, subsumed as utilities and concession-bound firms. In this study we conceptualise location fixity and investigate the firm's strategies and capabilities to mitigate any negative impacts, which could affect its value creation. In a first part, we approach the related research questions with view at single sites, before turning to aspects of value creation and synergy realisation within multi-site settings. To this end, we conducted an embedded multiple case study on three firms within infrastructure-heavy industries, thus collecting rich evidence for further theory development. The key findings of this dissertation are: (1) Location-bound firms are highly dependent on local stakeholders. The thus resultant institutional exposure to their local environment may negatively influence their strategic options, business risks, and economic aspects of daily operation. (2) Firms are able to mitigate institutional exposure by developing capabilities for embedding in their local environment. Such embedding increases their organisational legitimacy, thereby improving the firm's prospects for long-term success and support from its environment. (3) Internationally present location bound firms face liabilities of foreignness, entailing obstacles not existent to local firms. The corporate parent therefore is able to support the local firm in distinct fields, where it enhances value creation, whereas other fields need to be managed decentrally to facilitate local embedding. Overall, also the location-dependent utilities and concession-based firms are able to create value through multisite resource management, albeit predominantly on an intangible dimension by exchanging best practices and realising economies of experience.
ACCESSION #
82763031

 

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