The theory of geographical agglomeration - minimum requirements and a knowledge-based suggestion

Abstract

One of the most significant consequences of the present process of globalization is the way in which it continues to turn inputs, previously crucial to the competitiveness of firms, into ubiquities. Globalization has increasingly been associated with the ‘unbundling’ of the previous relationship between sovereignty, territoriality and state power (Ruggie, 1993) and, as a consequence, steadily weakening nation states (Maskell, 2000), but it is arguably the many economic consequences of ‘ubiquitifcation’ that has contributed most in making globalization the favourite business buzzword at the recent turn of the century. Ubiquities are inputs equally available to all firms at more or less the same cost almost regardless of location (Weber, 1909). A large domestic market is, for instance, no longer an unquestioned advantage when global transport costs are becoming negligible; when the loyalty of customers toward national suppliers is dwindling; and when most trade barriers have eroded. Domestic suppliers of the most efficient production machinery are, similarly, no longer a solid competitive advantage, when the sales-and marketing strategies of the suppliers reach across borders, and their equipment becomes available world-wide at essentially the same cost. The omnipresence of organizational designs of proven value makes, furthermore, a long industrial track record less valuable. So when input becomes ubiquitous, all competing firms are, in a sense, placed on an equal footing. What everyone has cannot constitute a competitive advantage.

Article FootNote

The role of ubiquities in changing the competitive environment is discussed in more detail in Maskell et at. (1998) and in Maskell and Malmberg (1999).