SME Competitive Strategy and Location Behavior: An Exploratory Study of High-Technology Manufacturing

Introduction Regional development of high technology-based industries has attracted the attention of researchers in the fields of industrial management, entrepreneur-ship, economics, and urban planning for the past two decades. More recently, the rapid national and global proliferation of high-technology centers, incubators, and "technopolis" communities has highlighted the need to more fully understand the driving forces behind this growth (e.g., Tamasy 2007; Drejer 2005; Lofsten and Lindelof 2003; Stuart and Sorenson 2003; Biggiero 2002; Preer 1992). One important factor impacting the competitive strategies and location decisions of both high-technology and traditional manufacturing firms is the development of flexible, modular, and cluster-based manufacturing technologies (Small 2007; Dasci 2005; Galbraith and DeNoble 2002; Wadhwa and Rao 2000; Boyer 1999; Boyer et al. 1997; Dean and Snell 1996). These advances have allowed some manufacturing firms, particularly small to medium-sized technology-based enterprises, to become much more fluid in their location decisions, thus freeing them of encumbering long-term commitments to a particular site or region (Galbraith and DeNoble 1995; McDonald 1986). Like any other business investment, the flexibility of production switching with low change-over costs, as well as the ability to quickly shift operations between diversified locations, each with varying input cost structures and output distribution benefits, now provides a valuable location-related real option (Nembhard, Shi, and Aktan 2005; Wu and Lin 2005; McGrath and MacMillan 2000; McGrath 1997; Lei, Hitt, and Godhar 1996). Not surprisingly, many technologically advanced manufacturing companies report that they regularly reevaluate the merits of their existing location networks as part of an ongoing, dynamic planning process rather than assuming location to be primarily a depreciated fixed asset (MacCormack, Newman, and Rosenfeld 1994). The ability of an organization to refocus or relocate all or part of its operations within a relatively short timeframe has elevated the importance of the location issue not only as a component of competitive strategy, but also as a way to understand the rapidly changing industrial constituencies of various communities (Alcacer and Chung 2007; Cumbers, Mackinnon, and Chapman 2003; Vereecke and van Dierdonck 2002; Ginsberg, Larsen, and Lomi 2001; Ferdows 1997a; Lei, Hitt, and Godhar 1996; Bartmess et al. 1994; Kogut and Kulatilaka 1994; Galbraith and DeNoble 1992; DeMeza and Van der Ploeg 1987). Following this line of research, the purpose of this study is to investigate whether significant linkages exist between selected aspects of manufacturing and competitive strategy and related infrastructure requirements at both the regional- and site-specific levels of analysis. Literature Review Early approaches to understanding industrial development and location decision-making are rooted in Weber's (1929) neoclassical assumption that the maximization of owner wealth is critical to the location decision of manufacturing facilities. Since Weber's work, early location and regional development economic theory expanded on the notion of "agglomeration," where firms were believed to cluster in regions primarily because of demand and supply considerations (e.g., Goodman and Bamford 1989). More recently, as in the case of the first-generation high-technology centers of California's Silicon Valley and Boston's Rte. 128, interest has switched to the influence of intellectual resources, social, and venture capital networks to explain agglomeration tendencies (e.g., Alcacer and Chung 2007; Drejer 2005; Cumbers, Mackinnon, and Chapman 2003; Sorenson 2003; Stuart and Sorenson 2003; Suarez-Villa 2002; Baptista 1996; Saxenian 1994 1991; Jarboe 1986; Malecki 1984; Dorfman 1983). With the rise of second- and third-generation technology centers, research studies have started investigating the influence of factors related to more ambience and personal lifestyle issues (e. …