I take as a starting point that the location-specific assets of the home
country determine to a significant degree firm-specific assets of its
firms and MNEs. This strong bond persists because of the interdependence
between actors within a system, which has a growing cross-border aspect
due to globalization. I highlight the importance of institutions, not as
a black box of rules, but as an invisible mesh that envelope, shape and
constrain the actions of actors in a given system, and these actors are
themselves - collectively and occasionally individually - responsible
for the nature of institutions.
I highlight that location advantages are not always freely available to all actors in a given location. There are important location advantages that are 'members-only' for which access is restricted to incumbents, and do not have a public good nature implied in the IB literature. This lies at the heart of the inertia of firms, and the difficulties of successfully leveraging location-bound assets in other countries, as well as the challenges of 'leaving home', since they may forfeit domestic 'membership' to do so. Home country L assets play a large part in defining EMNE FSAs, and where governments are unable to upgrade these (due to government failure or regulatory capture) it weakens the building block upon which sustainable outward FDI is possible.
Keywords: collocation, innovation systems, emerging countries, MNEs, institutions, globalization, location advantages
JEL: F23, F68, O32