Clark University

The Geography of Economic Activities: Some Critical Viewpoints on Theory and Application
Author(s): Gunnar Törnqvist
Source: Economic Geography, Vol. 53, No. 2, Planning-Related Swedish Geographic Research
(Apr., 1977), pp. 153-162
Published by: Clark University
Stable URL: http://www.jstor.org/stable/142722
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 THE GEOGRAPHY OF ECONOMIC ACTIVITIES:
SOME CRITICAL VIEWPOINTS ON THEORY
AND APPLICATION

GUNNAR TORNQVIST
University of Lund

This article examines the diminishing utility of mainstream "classical"

location theory. Recent societal changes are related to the "identification
problem" of manufacturing activities. Information flows and interdepen-
dencies are portrayed in terms of "planes of communication."The nature
of locational decisions is discussed, normnnative
behavioral approaches and
actual behavior are contrasted, and multi-dimensional locational problems
are considered.

So-called location theory, probably known, and in part further developed

more so than any other theoretical area
of central interest to geographers, is as-
sociated with the output of scholars who
are deservedly labelled "classical."
Johann Heinrich von Thiinen published
his theoretical study of the isolated state
as far back as 1826, thus laying the foun-
dation for the development of agricul-
tural location theory [26]. Working with-
in the framework of then prevailing eco-
nomic theory, Alfred Weber presented
his fundamental work on industrial loca-
tion theory in 1909 [27]. At the begin-
ning of the 1930s Walter Christaller
published his famous central place the-
ory, a theory which in its original ver-
sion was mainly a theory of the location
of retail trade and services [1]. A great
number of other works relating to loca-
tion theory were printed during the
1920s and 1930s. Many of the authors
are today regarded as classical scholars,
whose theoretical contributions comple-
ment the works already mentioned. In
my opinion, the most interesting of these
authors from a geographical viewpoint
is August Losch, who published his first
location theory studies around 1930. His
major and best known work was first
published more than ten years later
[11]. During the 1940s and 1950s several
works appeared which in part helped to
make the classical theories more widely
certain aspects of those theories [6; 8;
9; 14; 15].
Today these classical scholars have
more than just a place in the history of
geographical thought. Their ideas are
still very much in use, a fact which is
remarkable considering the enormous
societal changes which have taken place
since their works were initially pub-
lished. Their fundamental approach and
analytical methods have been criticized,
but with little effect. Contemporary text-
books still present dressed-up versions of
the classical location theories, and apply
them to new situations and problems
other than those which they were ac-
tually intended. Concepts used in the
classical theories constantly crop up in
current discussions concerned with
localization and regional policy. Old
theory is applied to new problems. The
critical views put forward in this article,
stressing manufacturing activities, do
not constitute criticism of the classical
theories as such, but of the way in which
they are applied today.
Only a few critical points will be dis-
cussed in this article. These views have
emerged in conjunction with the work
being carried out by a research group in
economic geography at the Department
of Social and Economic Geography at
 154 ECONOMICGEOGRAPHY
the University of Lund.' This research
group has been working for some years
on regional issues and problems which
have been found difficult to tackle with
the approaches and concepts typical of
classical location theory. However, in
this context it is essential to stress that
the lines of thinking presented here are
neither new nor original. Economic
geographers from many countries con-
cerned with location problems have put
forward and discussed the same or simi-
lar ideas. The fact that scholars are now
thinking along these lines is confirmed
by a few recently published anthologies
[3; 7].
THE IDENTIFICATIONPROBLEM
In traditional location theory and in
older localization studies, the workplace
was the smallest unit and the obvious
subject of study. The workplace and the
firm could also be regarded as identical
entities. It was also reasonable to assume
that, with a few exceptions, the em-
ployees of a manufacturing firm were
engaged in production activities and the
handling of goods. As the range of goods
was not particularly diversified and pro-
duction processes were fairly similar in
any group of films, it was not mislead-
ing to compile statistics in which work-
places were grouped by industrial
branch or sector, i.e., according to the
products they made.
Today the firm or related types of
organization often consist of several
workplaces. The spatial structure of an
organization may be local, regional,
national, or multinational. National and
multinational firms may, as we know, be
on an enormous scale with annual turn-
overs on a par with the national budgets
of small countries. They can have thou-
1 At present the members of this research
group are: Kerstin Cederlund, Torbjmrn Ek, Ulf
Erlandsson, Bertil Johansson, Ola Jonsson,
Goran Lundin, Lars-Olof Olander, Christer
Persson, Tommy Persson, G6ran Rosberg,
Gunnar T6rnqvist, and Ann-Cathrine Aquist.
sands of employees, millions of custom-
ers, and hundreds of thousands of share-
holders. The giants among them can
have several hundreds of plants and of-
fices spread all over the world. When a
firm develops into a complex system of
this kind, questions of location often as-
sume, as we shall see later, quite a dif-
ferent character from those on which
accepted theories are based [12].
One very important feature to be ob-
served among the societal changes that
have occurred in the last few decades
is the greatly accentuated division of
labor and specialization. At the level of
the workplace we can see the assembly
line as an example of the almost extreme
application of the division-of-labor prin-
ciple. As this principle has continued to
develop, work has been divided up into
smaller and smaller components. But it
is no longer true that further specializa-
tion leads to greater efficiency. Today,
scattered efforts are being made to re-
place the assembly line with other forms
of work organization.
The "functional" division of labor
within the firm is another fact that
makes it difficult to apply classical loca-
tion theory when studying modern cor-
porate development. A growing fraction
of the people employed in the manufac-
turing sector provide services and per-
form purely administrative duties. These
functions are often located in places
other than where the actual manufac-
turing is done. A firm may consist of a
head office, district offices, research cen-
ters, warehouses, and manufacturing
plants. Obviously, the environmental re-
quirements for the existence and func-
tioning of these establishments varies.
Consequently, the location problems fac-
ing the firm have many more dimensions
than those provided for in classical loca-
tion theory [22].
A very far-reaching division of labor
between workplaces and firms is char-
acteristic of the present. Industrial pro-
duction is largely a matter of teamwork.
Manufacturing occurs in vast production
 ECONOMIC ACTIVITIES 155

STAGE 4

STAGE 3

STAGE 2

STAGE 1

O ASSEMBLY PLANT
. MANUFACTURINGAND REFININGPLANTS

Fig. 1. The time-space organization of production.

 156 ECONOMIC GEOGRAPHY
systems, which are comprised of assem-
bly plants with specialized sub-contrac-
tors at several levels. The finished prod-
ucts of one factory are the raw materials
of others. The stage of production of a
given product often cannot be deter-
mined easily. Figure 1 serves as a simple
illustration. The figure shows five levels.
At the uppermost level (stage 4) there
is an assembly plant, from which fin-
ished products are distributed. At the
level directly below (stage 3) are the
immediate sub-contractors to the assem-
bly plant, on the next level sub-contrac-
tors to these sub-contractors, and so on.
The diagram at the lowest level repre-
sents the sum of all the other levels, and
illustrates the total spatial organization
of a single production system. In key
manufacturing branches, such as the
automobile, aircraft, and shipbuilding
industries, the number of sub-contrac-
tors at level three alone, or those direct-
ly serving the assembly plants, can run
up to several thousand. The total spatial
organization of production (the bottom
level) can in these cases encompass a
large share of a country's total trade and
industry. Studies of such large produc-
tion systems are now being carried out
in Denmark and Sweden and their re-
sults will be published shortly.
The described developments confront
those geographers concerned with loca-
tion questions with problems which, for
the moment, can be termed identifica-
tion problems. How can geographers
identify and measure manufacturing ac-
tivities? Production and employment
data-at best classified according to
workplaces, and in most other instances
broken down by firms and industries-
can hardly lead to any deep insight into
the processes occurring in complicated
and spatially dispersed systems. There
is no doubt about identification being a
problem if questions such as the follow-
ing are posed: How much energy or
other resources does it take to produce
a certain number of plastic boats, auto-
mobiles, or houses? If Volvo radically
reduced its output of passenger cars,
what economic activities would be af-
fected and what would be the local, re-
gional, and national effects?
The research on projects now in prog-
ress at the Department of Geography at
Lund University represents an attempt
to study the complicated organization of
work in different activity areas of today's
society, such as public administration or
the manufacturing sector. Given the
length limitations set on this article, a
"project" can be fittingly exemplified by
the manufacture of a product or a cer-
tain quantity of goods. Such a project
can be seen in time-geographic terms,
i.e., it has both a temporal and a spatial
dimension (Figure 1). A project nor-
mally cannot be pinned down to one or
a few points on a map. It requires a com-
bination of many physical facilities,
equipment, and people at different
places. Some of these are engaged in the
project simultaneously, others must be
linked together in a specific chronologi-
cal order. This requires coordination.
Using somewhat different terms,
which are not yet thoroughly thought
out, a production system can be de-
scribed as being built up of a great numn-
ber of "roles." These roles are played by
people as well as machinery and equip-
ment which are usually tied to premises
and spaces whose location can be spec-
ified. The roles are linked together and
coordinated by different kinds of com-
munication. The project is carried out
within this "role-system" through the
means of constant goods shipments and
an intensive exchange of information via
telecommunications and face-to-face
contacts.
PLANES OF COMMUNICATION
A great deal of attention was paid in
classical location theory and older em-
pirical studies to the firm's raw-material
and finished-product shipments. The
minimization of transportation effort and
costs usually played a decisive role in
 ECONOMIC ACTIVITIES
locational models, which were often of
outstanding graphic and mathematical
elegance.
A reaction against this emerged at the
beginning of the 1950s. Researchers
started to question the predominant im-
portance of transportation costs. A few
years later, quantitative methods were
developed that made it possible to test
new assumptions [23; 25]. Studies in
Sweden and other countries revealed
that the composition of industry, its han-
dling of goods, and transport techniques
had changed to such an extent that
physical distances no longer played a
decisive role in the location of some, but
not all, large activity groups. It also be-
came apparent that the concepts of
"ctransportation" and "transport costs"
could be broadened so as to include
various kinds of information transmis-
sion and personal travel.
During the 1960s and early 1970s sev-
eral large-scale studies focussed on the
interdependence relationships (in the
form of goods shipments and informa-
tion flows) which are necessary for the
functioning of organizations and produc-
tion systems of the type described in the
foregoing section [17]. The findings of
these studies carried out by researchers
in different countries can be summed up
in a picture portraying three separate
horizontal planes of communication.
On the first communications plane
goods are transported. The volume of
goods moved on this plane has increased
enormously in recent years. Materials
and goods are transported all over the
region, goods are transported criss-cross
between sub-contractors and assembly
plants, between factories and ware-
houses and wholesalers, and between
wholesalers and retailers. Due to the
concentration of retailing, the transpor-
tation effort of households also has in-
creased considerably.
Seen as a whole, the transport flows
on this plane appear somewhat without
plan. Different firms and authorities plan
their activities in isolation, and this
157
means that transport performanoe on the
whole is sub-optimal. What data is avail-
able on transport flows provide no signs
of overall organization or coordinated
planning of the transport efforts on this
plane.
One of the reasons why transportation
on this plane has increased on such a
scale and in such a way is that energy
prices have been very low in compari-
son to, for example, those costs which
are subject to economies of scale. It has
also proven very easy to shift the burden
of transport costs to other sectors, e.g.,
to the household sector, where no aggre-
gated registration of these costs takes
place. Finally, many decision makers
have probably lost their sense for trans-
portation and physical distance as a re-
sult of the great mobility they daily ex-
perience on the other planes of com-
munication. It is likely that future fuel
shortages and the emergence of a society
oriented toward low-energy consump-
tion may radically change this situation.
Large-scale rationalization may be
necessary on this plane, and the need
for research centering on the transport
of goods may increase again [24].
On the second communications plane
information is exchanged via face-to-face
contacts, thereby requiring personal
travel. An increased need for personal
contacts has led to a vast growth in
"organizational traffic." The intensity of
this type of travel must not, however,
overshadow the fact that distance ex-
ercises considerable friction on this sec-
ond plane. People communicating on this
plane are almost always pressed for time.
They always have tight schedules, and
because personal contacts require simul-
taneity in time and space, the coupling
processes on this plane are very com-
plicated. There appears little doubt that
the increased need for personal contacts
and the coupling constraints on this
communications plane are among the
primary reasons for large city growth
during the 1950s and 1960s [4; 5; 20;
22].
158 ECONOMIC GEOGRAPHY

Before proceeding any further one flected situations in the infancy of in-
other phenomenon on this second com- dustrialization, which in some respects
munications plane should be observed. can be likened to a colonization phase.
If people have to meet other people long In today's advanced industrial coun-
distances away, then they have to use tries quite another situation prevails.
express trains or air services. The result- "Classical" locational decisions are still
ing contact system can be likened to a made. They attract a great deal of inter-
strongly focussed network, consisting of est and are the subject of lively discus-
a set of nodes linked by fixed transport sions, but it is also obvious that this type
routes, which people must use for get- of decision is not particularly common.
ting from one place to another. The Other types of decision dominate cor-
travellers moving constantly within this porate operations.
network must acquire a somewhat sin- From the geographical point of view,
gular view of the world around them. there is now every reason to scrap the
The question of how this view may affect narrow definition of the "locational de-
decision makers will be dealt with later. cision" concept and broaden it so as to
On the third communications plane embrace all the decisions made in firms
information is disseminated and contacts and other organizations that can be
are made via various forms of telecom- shown to have spatial consequences.
munications. The information exchanged This greatly broadens the geographer's
on this plane is more routine in nature field of inquiry.
than the information exchanged on the Recent literature [3; 7; 17; 24] regards
second plane. Distance is of little im- the firm as an organization which must
portance. It would seem reasonable to constantly adapt to changes in its en-
assume that the ease and speed with vironment. Sometimes the environment
which information can be transmitted is influenced and has to adapt to the
and disseminated on this plane gives con- firm. Environmental changes may take
temporary man in a technologically ad- the form of altered markets, amended
vanced society the feeling that physical legislation, modified prices for goods and
distance is of practically no importance. services, changed conditions of compe-
If so, this sense of distance being of no tition, modified transport facilities, etc.
account may contribute to what, in cer- More concretely, such changes might re-
tain contexts, probably constitutes "un- sult from the construction of a bridge
economic" mobility on the other planes. over Oresund (the sound separating
The linkages between communications Denmark and Sweden) or the emer-
planes, i.e., the picture of how the vari- gence of a society oriented towards low
ous kinds of transports and contacts suc- levels of energy consumption.
ceed one another in sequences, is clearly Firms daily make decisions on how
suggested by the "project"concept intro- best to adapt themselves to changes in
duced in the foregoing section. the surrounding world. One way to
adapt may, of course, be to move opera-
WHAT IS A LOCATIONAL DECISION?
tions to another place, or to close down
or set up branches. But there are many
Many people equate a locational de- other ways. Given the structure organi-
cision with a decision to set up a new zations and production systems have to-
establishment, or to relocate, or to close day, there are plenty of ways a firm or
a physical facility. The choice of a loca- organization can rearrange itself within
tion for a workplace or a production its existing framework. A firm can under-
unit was also the central question in clas- go functional change, which means that
sical location theory. The localization resources it has in the form of physical
examples given in older works often re- facilities and personnel can be used in
 ECONOMIC ACTIVITIES
different ways than previously. Role
composition can be altered within indi-
vidual firm units, and the distribution
of roles among those units can be
changed. There are plenty of examples
of how firms can adapt themselves by
changing their relations with the outside
world, thereby changing their communi-
cations patterns.
In all probability, all these adjustment
processes have regional consequences,
e.g., for employment and traffic. Living
conditions and the environment are
changed during the decision-making
process without any awareness that such
is the case. Because of the highly com-
plicated patterns of interdependence
which prevail, spread effects are almost
impossible to foresee with the limited
knowledge we have. Geographers pres-
ently have a chance to make significant
contributions toward a deepening knowl-
edge of spatial processes of this kind.
NORMATIVE APPROACHES AND ACTUAL
BEHAVIOR
The models used in classical location
theory can be called normative. The
starting point was the individual firm.
The locational calculus aimed to achieve
optimal solutions, i.e., minimizing costs
or maximizing income or profits. A more
comprehensive approach to socioeco-
nomic problems was fairly late to de-
velop; and when it did it was still nor-
mative and assumed economically ra-
tional human beings. The normative ap-
proach implies that decision makers base
their reasoning totally on economic prin-
ciples and ask themselves questions such
as: "Where can and ought a certain ac-
tivity be located?"
During the 1950s a school of thought
more oriented toward the behavioral sci-
ences began to emerge in economic the-
ory. The lines of thought involved also
had an impact on the location theory
literature and great importance was
attached to them in geography [3; 10;
16; 18; 19]. Older location models were
159
criticized, partly because they did not
explain the real behavior of firms and
actual location patterns.
The critics influenced by behavioral
science put forward the following argu-
ments. Business executives and other de-
cision makers are in reality only rational
to a limited extent, i.e., they do not
choose the wholly optimal solutions of
the type required by normative models.
This might be due to the fact that deci-
sion makers have values which differ
from those of such models. Moreover,
decision makers probably do not have
the comprehensive information and
knowledge assumed in such models. De-
cisions are based on very uncertain
premises and limited knowledge of the
environment. Knowing that he cannot
be absolutely certain of reaching a prof-
it maximizing decision at a reasonable
cost and with moderate effort, the busi-
nessman opts for a decision which at the
moment is regarded as satisfactory.
In the context of ongoing research, our
group considers it important and attrac-
tive to confront certain aspects of the
normative and behavioral approaches.
Our intention is to compare the "objec-
tive" world mapped out in various
studies with the "subjective" view of the
surrounding world held by various de-
cision makers.
The objective world-image, where the
.word "objective" should not be taken too
literally, is represented by already com-
pleted studies on how the conditions
governing the existence of firms and
governmental authorities vary in differ-
ent respects from place to place in the
Swedish system of cities. Studies have
also been carried out which similarly
show both the situation of firms and the
commuting and service-accessibility pos-
sibilities of households within a city-
region [13; 21; 24].
Few, if any, direct attempts have been
made to chart the subjective image de-
cision makers have of the world around
them. But there are many studies of how
decisions are made in firms and other
160 ECONOMIC GEOGRAPHY
organizations. They reveal the following:
there is little recognition that decisions
other than pure locational decisions can
have spatial consequences; locational
decisions are often regarded as less im-
portant than other types of decisions, and
when they are made, only a few persons
are involved; decisions (locational and
otherwise) are usually made after only
a very short search process, only very
few alternatives are considered; deci-
sions are often based on very little data
and analytical methods are simple and
unsophisticated; in questionnaires and
interviews, decision makers are only too
ready to stress the importance of eco-
nomic factors in location decisions; more
penetrating but less formalistic inter-
views show, however, that these factors
are often pushed aside in real decision-
making processes in order to make room
for judgments best classified as person-
ally subjective [3; 7].
There are many indications that deci-
sion makers approach spatial questions
with a feeling of great uncertainty. They
feel that the world around them is com-
plex and unfathomable. Experienced de-
cision makers know that even well
thought-out programs have to be
changed while they are still in the proc-
ess of being carried out. During a search
process their own intentions are con-
fronted by those of others. Conflicts of
interests are common. The solutions they
finally arrive at are often compromises.
Our impending research does not aim
to develop a location theory based on
purely behavioral assumptions. In my
opinion, a theory of this kind can hardly
satisfy the most elementary require-
ments for simplicity and general appli-
cability. Decision-making situations are
complex and the ways of tackling them
are many. One and the same situation
can be interpreted in many different
ways.
The studies under way in Lund have
a very limited purpose in the light of
what has been said so far. Their purpose
is to study how decision makers compre-
hend the spatial dimension, or, in other
words, how they interpret the world
around them. The hypothesis is that each
person has a highly personal image of
the world around him, but that it is very
much tinged by his work function, where
his work is located, and the contacts he
has. One of the purposes of now com-
pleted extensive personal-contact studies
has been to identify the features com-
mon to different contact networks (see
the discussion of different communica-
tions planes above). It now remains to
determine if there are any demonstrable
links between individual contact patterns
(which have many common features for
individuals with similar work roles), and
these individuals' understanding of the
world around them. If such links exist,
it should be possible to bridge the gulf
between the normative and behavioral
assumptions of location theory. Studies
now in progress are examining individ-
uals associated with firms and house-
holds in the Oresund region. The studies
are based on interviews with decision
makers in business and government
organizations as well as individual house-
hold members. The region being studied
is particularly interesting since it encom-
passes both a national border and a com-
munications obstacle which produces
very obvious barrier effects. Initial find-
ings indicate that we are on the right
road, a road which can lead us to deeper
insights regarding the factors that con-
trol the spatial behavior of firms and
individuals.
MULTI-DIMENSIONAL LOCATIONAL
PROBLEMS
In classical location theory it was pos-
sible to discuss optimal solutions, partly
because the location problems tackled
were very simple and well structured.
Questions regarding optimal location
were handled on the basis of the sup-
posed needs and views of a limited and
often homogeneous interest group (e.g.,
the manufacturer, the entrepreneur, or
 ECONOMIC
ACTIVITIES 161
the ice-cream vendor on the beach). The costs is shifted from one group to an-
consumer's situation was also studied in other.
a one-sided manner. Confrontations be-
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