Bathelt, Harald

Permanent URI for this collectionhttps://hdl.handle.net/1807/70973

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Global Buzz at International Trade Fairs: A Relational Perspective
(Routledge, 2010-12) Schuldt, Nina; Bathelt, Harald
This research on international trade fairs and their role in processes of network generation and knowledge circulation originates from knowledge-based conceptions of industry clusters and open questions identified in this body of work. This chapter investigates the importance of temporary face-to-face contact and the physical co-presence of global communities in establishing a particular information and communication ecology during international trade fairs, referred to as “global buzz”. These events bring together agents from all over the world and create temporary spaces for presentation and interaction. Within a specific institutional setting, participants not only acquire knowledge through face-to-face communication with other agents, they also obtain information by observing and systematically monitoring other participants. The fact that firms do not necessarily have to be in direct contact with a specific source of information to get access to this knowledge makes participation in these events so valuable. This chapter investigates the constituting components of global buzz, and aims to dismantle the complexity of this phenomenon in a multi-dimensional way. It concludes that future research will have to take into account complementarities of trade fair interaction with virtual interaction through Internet platforms, as these are likely to shape existing and new social and spatial divisions of labour.
Inter-cultural Economic Practices and Institutional Support in Shanghai’s Automobile Supplier Industry
(Routledge, 2016-11) Depner, Heiner; Bathelt, Harald
The aim of this chapter is to investigate how different standards and practices affect the integrative potential of German and Chinese operations in the automobile supplier industry, focusing on the Shanghai region. This study has provided evidence of how the development of production and the organization of value chains by firms from different national contexts can be threatened as a consequence of different specializations, institutions and practices. Interaction in the context of the automobile industry in China was, at least in part, impeded by the agents’ different expectations and their embeddedness in different social, economic and cultural systems. From a relational perspective, it is key to recognize the instrumental role of inter-personal relations and their making in processes of inter-firm interaction within value chains and across the boundaries of specific national production and innovation systems. This study also suggests that territorial connections and trans-territorial flows crucially depend upon the roles of certain individuals that operate as boundary spanners.
China’s Outward Investment Activity: Ambiguous Findings in the Literature and Empirical Trends in Greenfield Investments
(2022-03) Yang, Ruilin; Bathelt, Harald
With the rapid increase of China’s outward foreign direct investments (OFDIs) since the early-2000s, a growing body of literature has developed that investigates investment processes and their underlying motivations and tendencies. Three important findings emerge from this literature. First, it has been noted that the generation of market and resource access have been key drivers of investment activity. Second, China’s OFDIs have accordingly focused on mature manufacturing and natural resource sectors. Third, a large proportion of OFDIs are assumed to have been directed to neighboring countries in East Asia or other developing economies, for instance in Africa. However, a literature review reveals limitations in prior studies with respect to measurement biases, database incompatibilities, the neglect of a knowledge perspective and a lack of sectoral differentiation. Descriptive analysis based on a comprehensive firm-level dataset of greenfield investments shows that previous findings are only partial. According to fDi Markets data from 2003 to 2016, OFDIs from China are more diversified and widespread than assumed. Many recent investments have a distinct knowledge motivation, are focused on high-tech and business service sectors and non-manufacturing functions, and are directed toward developed economies.
The Interplay Between Location and Strategy in a Turbulent Age
(2022-02) Bathelt, Harald; Li, Pengfei
The spread of protectionist policies and the COVID-19 pandemic force policymakers and managers to fundamentally rethink the relationship between location and strategy. We examine this location-strategy interplay through a structure-agency perspective by investigating how the economic landscape shapes and, simultaneously, is shaped by firm strategies. Increasing spatial disparity and diversity of innovation and wealth in clusters and city-regions create both tremendous challenges and opportunities for multinational enterprises to strategically leverage knowledge over space. Locational choices and actions of multinationals, in turn, affect regional economic development paths and geographies of innovation. We argue for deep dialogue and collaboration between economic geography, international business and strategy to untie the knots in the intricate interplay between location and strategy and solve the grand challenges in our turbulent age.
OFDI Activity and Urban-Regional Development Cycles: A Co-Evolutionary Perspective
(2022-07) Bathelt, Harald; Buchholz, Maximilian; Cantwell, John A.
Design/methodology/approach: Conventional views assume that inward foreign direct investments (IFDIs) have a positive impact on target regions while outward foreign direct investments (OFDIs) are often treated as the flip side of this story, being seen as having negative effects by shifting jobs and income abroad. This paper counters this logic by developing a conceptual argument that systematically distinguishes different types of OFDIs and relates them to economic development effects in the home (investing) region. Purpose: While the conventional view primarily relates to efficiency-seeking investments, we argue that most other OFDIs likely have positive effects on income development in the home region. Data on the U.S. urban system illustrates this but also shows that this impact is not equal in all city-regions. We develop an explanation as to why high-income and low-income cities are associated with self-reinforcing cycles of OFDI activity that have different home-region impacts. Findings: Employing a co-evolutionary conceptualization, the paper suggests that many high-income cities are characterized by a virtuous cycle of development where high, successful OFDI activity generates both positive income effects as well as incentives to engage in further OFDIs in the future, thus leading to additional income increases. In contrast, it is suggested that low-income cities are characterized by what we refer to as vicious cycles of development with low OFDI activity, few development impulses and a lack of incentives and capabilities for future investments. Originality/value: This paper develops a counter-perspective to conventional views of OFDI activity, arguing that these investments have a positive impact on regional income levels. We develop a spatially-sensitive explanation which acknowledges that OFDIs do not trigger a linear process but are associated with diverging inter-urban development paths and may contribute to higher levels of intra-urban inequality. From these findings, we derive conclusions for future research and public policy.
Spatial Knowledge Strategies: An Analysis of International Investments Using Fuzzy Set Qualitative Comparative Analysis (fsQCA)
(2021-07) Li, Pengfei; Bathelt, Harald
Knowledge generation is often viewed as a direct outcome of spatial proximity or other social affinities between firms. In rejecting structural interpretations, this article emphasizes the crucial role of agency in orchestrating knowledge transfer and generation over space. We explore how firms strategically leverage the uneven geography of knowledge in international investments and identify four spatial knowledge strategies according to the direction of knowledge flows and mode of connection: knowledge replicating, scouting, connecting and integrating. Drawing from a relational perspective, we develop four propositions to investigate how these strategies are configured in specific spatial settings. It is argued that replicating and scouting strategies occur from clusters to non-clusters and from non-clusters to clusters, respectively, while connecting and integrating strategies take place in cluster-to-cluster contexts. Adopting fuzzy-set Qualitative Comparative Analysis (fsQCA), an investigation of 49 headquarters-subsidiary linkages between Canada and China substantiates the four knowledge strategies and their spatial configurations and shows how spatial structure and agency are fundamentally intertwined and influence each other.
Models of Regional Economic Development: Illustrations Using U.S. Data
(2021-03) Buchholz, Maximilian; Bathelt, Harald
Considering stagnating regional prosperity levels and growing inter-regional disparities in many economies, this paper appeals for a renewed research agenda to deepen our understanding of regional economic development. This is done by discussing different conceptual perspectives, their empirical applications and open questions and suggestions for future research. Conventional approaches view development as an outcome of and dependent upon local economic structure. That is, high regional performance is associated with specific regional industrial and human capital mixes. We argue that to deepen our understanding of the mechanisms that drive regional economic development it is helpful to apply a relational approach that pays attention to the networks between economic actors across different spatial scales, from local to global. These generate knowledge as well as access to technologies, resources and markets, thereby catalyzing income growth. To support regional policy agendas, it is further necessary to go beyond identifying regularities that structure development and engage with differing regional pathways by conducting systematic comparative analyses of local contextual and institutional conditions.
Knowledge Exchanges, Trust, and Secretive Geographies in Merger and Acquisition Processes
(2021-05) Bathelt, Harald; Henn, Sebastian
Our current understanding of knowledge generation over geographical distance relies heavily on studies that focus on producer-user or headquarter-subsidiary settings. Less attention has been paid to the geographical particularities of knowledge exchanges in mergers and acquisitions (M&As), which involve high costs and an extraordinary degree of risk and uncertainty with potentially significant (positive or negative) consequences for the respective firms and regions alike. To keep the risks associated with such complex long-distance transactions at bay, buying firms strongly depend on robust knowledge about the structure and value of the target units while the sellers require reliable knowledge about the goals of the acquisition and the price the buyer is willing to pay. This paper aims to investigate the spatiality of related knowledge exchanges during M&A procedures by analyzing the role of face-to-face contacts and investigating the mechanisms to establish trust in undertaking such risky endeavors. Our empirical analysis focuses on national and international corporate acquisitions and takeovers involving German firms. It is based on semi-structured in-depth interviews with actors involved in M&As, conducted since 2012. We distinguish between the two extremes of relational and auction-based M&A procedures and systematically analyze in a process perspective (i) the conditions under which knowledge is exchanged over distance, (ii) the importance of temporary proximity and how secretive geographies of meetings evolve, as well as (iii) the ways in which trust is created and uncertainties are reduced.
Processes of Building Cross-Border Knowledge Pipelines
(2020-04) Bathelt, Harald; Li, Pengfei
Two classic perspectives of knowledge generation across space can be distinguished: one that focuses on localized knowledge networks in communities or clusters and another that investigates how innovation is linked to global knowledge networks of multinational enterprises. The former view has been prevalent in economic geography, the latter in international business. By integrating both perspectives, this paper focuses on the processes of how firms extend their knowledge networks from local to global settings. It develops a four-stage model of building cross-border knowledge pipelines, involving site selection, cross-border knowledge facilitation, local embedding, and cross-border knowledge generation. The model emphasizes the significant role of knowledge facilitators in building cross-border knowledge pipelines and is substantiated in a typical case study of Canadian firms in China.
Learning in Context: A Structural Equation Modeling Approach to Analyze Knowledge Acquisition at Trade Fairs
(De Gruyter, 2020-12) Zhu, Yi-wen; Bathelt, Harald; Zeng, Gang
Conceptualizations of trade fairs as temporary clusters have identified important learning processes at such events, particularly at leading international trade fairs – both in developed and developing countries. However, little attention has been paid to the home contexts of participating firms that may affect knowledge acquisition patterns. In particular, it is unclear which contextual factors may influence learning behavior. This paper aims to investigate the role of geographical context conditions at the exhibitors’ permanent locations and whether their knowledge acquisition behavior during trade fairs varies systematically with aspects, such as city scale, peripherality, growth dynamics and connectivity. Our analysis is based on a survey of 211 firms conducted between 2014 and 2018 at the China International Industry Fair (CIIF) in Shanghai – one of Asia’s most important manufacturing fairs. Using structural equation modeling (SEM), the study identifies significant pathways of knowledge acquisition and how these differ with geographical context.
Are Trade Fairs Relevant for Local Innovation Knowledge Networks? Evidence from Shanghai Equipment Manufacturing
(Taylor & Francis, 2019-12) Zhu, Yi-wen; Bathelt, Harald; Zeng, Gang
This paper studies the role of trade fairs in local innovation knowledge networks, combining data on co-patenting networks in the Shanghai equipment manufacturing (machinery) industry with data from the Shanghai Metalworking and CNC Machine Tool Show (MWCS). Three propositions are developed, suggesting that (i) local firms attending MWCS are more R&D intensive than other firms; (ii) trade fair attendees are linked with each other more closely in co-patenting networks than non-attendees; and (iii) participating firms have more local co-patenting linkages than non-participating firms. Our results largely support these propositions confirming that participation in flagship fairs is associated with strong integration in innovation knowledge networks.
Headquarters-Subsidiary Knowledge Strategies at the Cluster Level
(Wiley, 2019-08) Li, Pengfei; Bathelt, Harald
This paper examines how multinational enterprises (MNEs) leverage knowledge across clusters. Based on the geographical sources and the contextuality of knowledge, we construct a typology of four MNE knowledge strategies across space: replicating, scouting, connecting, and integrating, and take into consideration their spatial, industrial, and leadership contexts. A fuzzy-set qualitative comparative analysis (fsQCA) of 49 pairs of headquarters-subsidiary linkages between Canada and China suggests that replicating strategies occur in cluster-to-non-cluster contexts or in fields with a knowledge gap between the two countries, whereas scouting strategies are typical in non-cluster-to-cluster investments. Connecting and integrating strategies are focused on cluster-to-cluster contexts. We also find that while connecting occurs in fields where knowledge is locally bounded, integrating takes place in non-locally bounded contexts. Finally, scouting and integrating strategies are associated with home nationals as subsidiary leaders.
Income Divergence and Global Connectivity of U.S. Urban Regions
(Springer Nature, 2020-06) Buchholz, Maximilian; Bathelt, Harald; Cantwell, John A.
After a century of inter-regional income convergence, average incomes have been diverging between U.S. cities since the 1980s, calling for new policy agendas. We argue that policy research should move beyond its current focus on the effects of inter-city divergence from technological change, migration and trade, to include the effect of outward foreign-direct investments (OFDIs). This paper suggests OFDIs have contributed to income divergence across U.S. cities. We argue OFDIs can positively contribute to average income levels in investing (home) cities through labor, knowledge, multiplier and trade effects – a relationship that has not been systematically investigated in prior research. It is suggested that regional income levels and OFDIs are subject to a virtuous co-evolutionary process for high-income cities while having weaker effects for lower-income cities. This is tested with a combination of fixed-effects panel regressions and quantile regressions, before and after the 2008/09 financial crisis. Our key finding is that while OFDIs have a positive effect on regional income levels in the post-crisis period, their effect is largest for cities with incomes around the 60th to 80th percentiles of the income distribution. This suggests the benefits of OFDIs primarily accrue to already successful city-regions, allowing them to further their pre-existing lead.
Identifying Configurations of Multiple Co-Located Clusters by Analyzing Within- and Between-Cluster Linkages
(Wiley, 2019-12) Bathelt, Harald; Zhao, Jingyuan
The Beijing economy has an unusual industrial configuration consisting of multiple industry parks in the biomedical industry with a cluster-like structure, specifically Yizhuang Park, Daxing Park and ZLS (Zhongguancun Life Science) Park. If these industry parks can indeed be conceptualized as clusters, a number of questions arise regarding their collaborative or competitive relationships that can potentially be both beneficial or detrimental. We begin analyzing this case of three biomedical industry clusters by conceptualizing four ideal-type scenarios of co-located cluster configurations and identifying their within-cluster and between-cluster linkage patterns. Based on this relational research design, we develop a simple testing procedure that allows us to identify the specific empirical cluster configuration at hand. Based on a survey of labor market, government event, research and production linkages of 164 firms in the three biomedical industry parks, we conduct statistical tests and conclude that Beijing represents a configuration of three collaborating clusters.
Building Better Methods in Economic Geography
(De Gruyter, 2020-09) Bathelt, Harald; Pengfei, Li
This paper suggests that it is a timely task to aim at building better methods in economic geography. While economic geography is a vibrant field, it is characterized by methodological divides and fragmentations. In presenting a collection of five papers, we address these problems by suggesting to move forward in at least five directions: bridging the qualitative/quantitative divide, clarifying causality, selecting appropriate data, improving rigor, and ensuring high ethical standards.
Correction – Outward Foreign-Direct Investments as a Catalyst of Urban-Regional Income Development? Evidence from the United States
(Taylor & Francis, 2020-01) Bathelt, Harald; Buchholz, Maximilian
Questioning Cultural Narratives of Economic Development - An Investigation of Kitchener-Waterloo
(Wiley, 2019-01) Spigel, Ben; Bathelt, Harald
This paper investigates the relationship between culture and economy and scrutinizes cultural narratives of economic development in Kitchener-Waterloo, southern Ontario. It argues for the need to carefully conceptualize the link between culture and economic development to avoid boosting deterministic stereotypes. In the case of Kitchener-Waterloo, a notable hub of high-technology firms and technology development, a link is frequently drawn between the German community and culture and the region’s technology economy and entrepreneurial culture. A social capital analysis, however, reveals that the German ethnic community neither has the strong professional internal ties nor the external social ties to other regional communities that could constitute a lead role in economic development. Rather, the legacy of Kitchener-Waterloo’s ethnic German population has been absorbed into the region’s self-image and creates a feeling of belonging and common reference points for joint social and economic initiatives in the region.
Outward Foreign-Direct Investments as a Catalyst of Urban-Regional Income Development? Evidence from the United States
(Taylor & Francis, 2019-10) Bathelt, Harald; Buchholz, Maximilian
Challenging populist views of outward foreign-direct investments (OFDIs) that suggest they move prosperity abroad, this paper builds a model suggesting that OFDIs support urban-regional income levels due to (i) labor, (ii) knowledge and (iii) multiplier, spillover and intermediate input effects. In a panel study of median incomes in U.S. urban regions between 2005 and 2013, we first establish a base model that measures income as a function of local factor endowments (high skill levels, fast-growing and technologically sophisticated industries and urban scale effects). This base model is highly significant. In the next step we extend this model by adding our main variables of greenfield inward and outward investment intensity, and finally we integrate other indicators that measure the geographical, industrial and functional composition of OFDIs. While the results for other investment-related indicators are mixed, the main investment variables are highly significant, thus providing strong support that greenfield OFDIs act as a catalyst of urban-regional income development.
Location Strategy in Cluster Networks
(Springer Nature, 2017-07) Li, Pengfei; Bathelt, Harald
This paper investigates the location strategies of Canadian and Chinese multisite firms in international and domestic investment decisions at the metropolitan level. By integrating research from international business studies and economic geography, we combine knowledge-based understandings of multinational corporations and industrial clusters to develop propositions regarding the location strategies of multisite firms in cluster networks. It is argued that firms from clusters are more likely to adopt knowledge strategies than firms from other areas and that they tend to choose cluster locations that are specialized in the same or similar industries to achieve their knowledge goals – both in domestic and international investment decisions. We establish and analyze a database of 3500 investment cases within and between Canada and China to test our propositions. The results show that firms in knowledge-intensive industrial environments with substantial business experience are especially inclined to direct their investments to clusters. Consistent with our emphasis of the subnational as opposed to the national scale, we find that cluster-of-origin effects are more important than country-of-origin effects in explaining firms’ investment choices in clusters. These findings support the idea that multisite firms, particularly MNEs, leverage local knowledge pools by strategically locating affiliates across clusters.
Cross-Local Knowledge Fertilization, Cluster Emergence and the Generation of Buzz
(Oxford University Press, 2018-03) Henn, Sebastian; Bathelt, Harald
Recent work in economic geography has investigated how clusters evolve and change over time. Yet our understanding of such processes is still incomplete. Many accounts rest on a perspective that focuses on the development of solitary knowledge ecologies, while neglecting the fact that cluster formation may be triggered when different places are connected and begin to influence each other in mutual beneficial ways. This paper argues that conceptualizations of cluster emergence need to understand the crucial ways in which this process is from the very beginning associated with external linkages and trans-local pipelines. A model of cluster formation is presented that suggests how buzz generation is driven by the connections between different localities in four stages: (i) pioneering, (ii) expansion, (iii) off-shoot and (iv) fusion. We use the case of the global diamond industry, in both inductive and deductive ways, as an example to show that transnational communities and tight relational networks play a crucial role in forming cross-local connections that can trigger cluster emergence.

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