Location and the multinational enterprise (original) (raw)
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This paper examines how the characteristics of local inter-firm networks affect the location of subsidiary research and development (R&D) facilities. It distinguishes between subsidiary R&D that is competence-creating (creates new lines of technology for the multinational corporate group) and competence-exploiting (adapts established lines of technology). The key dimensions of local networks are the degree of cross-firm concentration or diversity in the relevant industry, and the relative presence of domestically-owned versus foreign-owned firms. The empirical investigation uses patents granted in the US to the world's largest industrial firms for inventions achieved in their European-located operations, classified by the host European region in which the research facility responsible is locate, over the period 1987-1995. Intra-industry spillovers are positive from dominant insider firms that are well connected locally, but negative when these insiders are domestically-owned. Foreign-foreign spillovers from non-dominant firms are positive in the competence-creating case.
2005
This paper examines how the characteristics of local inter-firm networks affect the location of subsidiary research and development (R&D) facilities. It distinguishes between subsidiary R&D that is competence-creating (creates new lines of technology for the multinational corporate group) and competence-exploiting (adapts established lines of technology). The key dimensions of local networks are the degree of cross-firm concentration or diversity in the relevant industry, and the relative presence of domestically-owned versus foreign-owned firms. The empirical investigation uses patents granted in the US to the world’s largest industrial firms for inventions achieved in their European-located operations, classified by the host European region in which the research facility responsible is locate, over the period 1987-1995. Intra-industry spillovers are positive from dominant insider firms that are well connected locally, but negative when these insiders are domestically-owned. Foreig...
Global and local knowledge linkages: the case of MNE subsidiaries in Argentina
2006
This paper is about the role of MNE subsidiaries in the generation of knowledge and linkages in industrialising countries. It develops an original typology of MNE subsidiaries based on the nature of their global linkages. Then, it explores how this typology is connected with different mental models of MNE's and discusses the impact of these two aspects on intra-subsidiary innovative activity and the formation of knowledge linkages at the local level -two important dimensions affecting subsidiaries' capacity to generate knowledge spillovers in host countries. Based on Argentinean data, the empirical analysis suggests that MNE subsidiaries engage in very diverse types of global networking. More specifically, the paper finds that the nature of such diverse global networks affects the local capabilities and the formation of knowledge linkages at the domestic level. In the light of this finding, we discuss the role of different types of subsidiaries on the generation of technological spillovers in host industrialising countries.
Global Strategy Journal, 2021
Research summaryInternational connectivity is a multidimensional construct that plays a pivotal role in attracting the activities of multinational enterprises (MNEs) by facilitating intra‐firm coordination and access to external resources. We conceptualize how the different dimensions of international connectivity determine the location of MNEs' knowledge‐intensive activities, with a focus on Research and Development (R&D) laboratories and Headquarter units (HQ). By analyzing 3,101 greenfield investments of MNEs in US Metropolitan Statistical Areas, we show that R&D activities are attracted toward areas connected to the rest of the world by international networks of inventors. Moreover, we find that infrastructures which ensure the mobility of people across borders, and greater connectivity through advanced producer services are key location factors for HQ activities.Managerial summaryThe choice of where multinational enterprises (MNEs) locate their knowledge‐intensive activitie...
2006
Given the importance of external research collaboration for multinational enterprises (MNEs), we examine the pace of knowledge spillovers and analyze MNEs’ location strategies for research collaboration in China by doing conditional logit estimation. As knowledge spillovers are associated with patent citations and foreign direct investments (FDIs), we find, by analysis of USPTO patent data and statistical data of regional economy, that the geographical distribution of MNEs’ research collaborators is positively associated with the distributions of local R&D intensity (patent stock) and FDI intensity (firms with FDI). Other results suggest that Japanese MNEs collaborate more closely based on the distribution of SIPO patent stock, while U.S. MNEs collaborate more narrowly and closely based on the distribution of firms with FDI. The findings further illustrate that MNEs’ location strategies are associated with not only inward knowledge spillovers but also outward knowledge spillovers in...
Global Strategy Journal, 2022
We respond to calls in the strategy and international business literature for elucidating how multinational subsidiaries develop contextual intelligence in host countries and how they use the local context as a source of valuable opportunities for learning. Applying the theoretical lens of subsidiary absorptive capacity and building on a gravity model, we propose an approach that can distinguish and compare the influences of the host country context and headquarters over the subsidiary knowledge production. Some subsidiaries may become global second headquarters and innovation hubs, as evidenced qualitatively in the paper with the case of Cisco. Essentially, subsidiaries, characterized by higher stocks of knowledge and greater number of locally hired employees are likely to absorb relatively more knowledge from the local host country context.
Physical attraction and the geography of knowledge sourcing in multinational enterprises
In this paper, we develop the concept of the degree of Physical Attraction exerted by the dominant firms in a local industry on other actors that increases the ease of local knowledge search for 'insiders' with stronger connections to others. Conversely, the Physical Attraction of dominant firms on other actors raises the difficulty of local knowledge search for 'outsiders' with weaker connections to others. Our theory has important implications for knowledge spillovers. As local industry concentration rises, the likelihood of local knowledge spillovers to outsiders falls, even with a high local knowledge stock. Further, in contrast to the strategic deterrence thesis that posits that technology leaders are deterred from entering clusters for fear of knowledge outflows, our theory implies that with high industrial concentration, it is technology laggards that are deterred, since they do not have the wherewithal to establish the local connections needed to access knowledge inflows. Using a large patent database associated with the UK-based subsidiaries of non-UK MNEs, we find strong support for our theory.
Location and survival of MNEs’ subsidiaries: Agglomeration and heterogeneity of firms
Strategic Management Journal
Our study provides a quasi-replication of Shaver and Flyer (2000), which was among the first studies that challenged the positive role of agglomeration in determining companies' location choice and performances, thus changing the way management scholars view companies' attitude towards agglomeration forces. We employ the same research design, specification and tests, and a different population, to discuss the generalizability of the original study. Building on the framework of the original study, our findings offer intriguing new empirical evidence highlighting the importance of the differential between entering foreign firms and host country firms as a crucial condition in understanding agglomeration forces and adverse selection mechanisms. Managerial summary Our exercise confirms that agglomeration forces act differently on stronger versus weaker MNEs. However, we find that stronger MNEs tend to avoid location in highly specialized areas when they are afraid of knowledge leakages towards host country-based rivals that have enough absorptive capacity to benefit and improve their competitive advantages. Managerial implications are quite relevant. Indeed, when MNEs avoid co-location in highly specialized areas, they also limit their own access to local knowledge and other agglomeration economies, such as supply networks and qualified workforce. Thus, MNEs managers need to design and implement devices that, on the one hand prevent local leakages of their knowledge and, on the other do not hinder their access to local unique knowledge and resources.
Multinational Enterprises and the Geographical Clustering of Innovation
Research on the geographic clustering of economic activity dates back to the early twentieth century. It is recognized that in spite of advances in transportation and communications, clustering remains most critical, and is consequently prevalent, in knowledge-intensive fields. Multinational enterprises (MNEs) that increasingly base their value creation and competitive advantage on knowledge-intensive activities are key participants in clusters, affecting both the nature and intertemporal evolution of local innovative activities. However, the role of MNEs in clusters remains under-researched. This paper traces the origins of research on geographic clusters, identifies the seminal contributions focusing on the role of MNEs, discusses potential problems inherent to this area of inquiry and develops an organizing framework for new research.