6. Theoretical and Conceptual Framework

Transnational Architectural and Engineering (A/E) firms have increasingly been getting involved in international markets because of liberalization of markets, proliferation in the demand for complex projects, generalized demands due to globalization and the firms’ own interests to venture abroad et cetera. However, there may be discontinuities at national and geographical boundaries, or there may be graduated differences that may sap the firm’s access to home-based resources and erode the competitive advantages of firms which attempt to venture overseas. Therefore, it has been suggested that domestic A/E firms have substantial or unique advantages over foreign A/E firms because they have better reach and knowledge of resources, channels, networks and markets in their home-market. Hence, according to many internationalization models, international firms often make use of their geographical and cultural proximities to venture into potential countries or cities near to their home market because these foreign markets are operationally more similar to their home market. On the other hand, the mosaic of the world is such that a disproportionate amount of economic activities are agglomerated in a few key cities on the globe. Transnational firms tend to venture into these core locations in search for markets. The size of the overseas subsidiary, both in terms of investment and staff-size, would normally be subjected to the perceived market potential. Likewise, the formulated business strategies should fit with the characteristics of the host environment. This chapter seeks to identify the strategic interplay between flight-distance, gravitational distance, agglomeration, core and peripheries of cities, internationalization, strategy and organization design.