This dissertation addresses why and how firms in developmental situations choose to locate where they do. In this dissertation, I challenge the abstract, ahistorical, and Western centric theories of location: the classical location, agglomeration, and...
This dissertation addresses why and how firms in developmental situations choose to locate where they do. In this dissertation, I challenge the abstract, ahistorical, and Western centric theories of location: the classical location, agglomeration, and business network theories. To show how non-western firms make locational decisions within institutional configurations populated by the developmental state and other multiple actors, I construct an historically specific evolutionary theory of industrial location patterns for the auto industry in South Korea and Japan.
In the first pre-industrialization periods, individual entrepreneurs establish small service and supplier firms in the metropolitan regions because of proximity to rich urban customers. In a subsequent period of state-led industrialization, the state's industrial promotion policy concentrates on existing large firms located in the metropolitan area and implicitly favors continued production and expansion in this area. However, as it adopts regional development policies, the state explicitly induces new entrants to locate in peripheral regions. In the next stage, assemblers may opt for single sourcing and exclusive inter-firm networks, as the private sector emerges and grows. They are thus likely to attract suppliers producing large and bulky parts and systems-component suppliers making modular subassemblies to locate near their assembly plants. However, in spite of the assembly firms' efforts to encourage agglomeration, adversarial business relations, labor management relations, and labor shortages discourage geographical proximity between assemblers and suppliers. In addition, diseconomies of agglomeration or labor problems at existing plants encourage decentralization, resulting in new domestic plants in greenfield sites. Finally, as the Korean economy becomes more globalized, trade policies and the assembly firms' transplant strategies diminish inter-firm organizational linkages with their domestic suppliers in favor of transactions with foreign supplier firms both at home and abroad.
I have chosen four assembly firms - Toyota, Nissan, Hyundai, and Daewoo - and their suppliers firms as test cases, employing both qualitative and quantitative data. I combine techniques relying upon interviews, archival analysis, site visits, and longitudinal data from annual reports. The results help regional scientists and policymakers understand likely future patterns of auto industry location in China and other Asian countries.