Technological Change and Economic Catch-up

Technological Change and Economic Catch-up

The Role of Science and Multinationals

Edited by Grazia D. Santangelo

This book tackles the issue of technological and economic catch-up by examining the role that public research institutions and local policy play in the promotion of this process by fostering local science–technology linkages with incoming foreign-owned multinationals. Although the book comprises various techno-socio-economic contexts and different methodological perspectives, the authors share the idea that public research, educational and political institutions provide capabilities in basic research and training of highly skilled labour, while private corporations establish networking connections with scientific and professional communities (and therefore access to knowledge and contacts) in other parts of the world.

Chapter 5: MNCs, Local Clustering and Science–Technology Relationships

John Cantwell

Subjects: business and management, international business, development studies, development studies, innovation and technology, innovation policy


John Cantwell BACKGROUND Since the 1960s, when location was central to discussions such as those on the product cycle model (Vernon, 1966) and the role of US direct investment in Europe (Dunning, 1970), interest in it as a critical factor in international business has experienced first a decline and recently a revival. The lessening of interest in the 1970s was largely due to the shift in emphasis in the international business literature from macro-level questions about countries and their trade and balance-of-payments positions towards micro-level questions to do with the organization of cross-border operations within firms. So the focus of investigation shifted from location to the firm. However, the international company itself has gradually come to be perceived in a wider context. The revival of concern with location has been in part based on major changes in the economic environment, such as the increasing importance of intellectual capital as the key wealth-creating asset, increasing globalization in the form of a closer integration of activity between countries, but at the same time an increasing concentration of some specialized knowledge-based functions within selected sub-national regions, and the rise of alliance capitalism (Dunning, 1998). Alliance capitalism involves both strategic alliances and acquisition exchange deals between leading firms, but it also incorporates extended local networks in many vicinities that entail new and often closer relationships not merely between firms themselves but between firms and other local actors (such as universities), in what have sometimes been referred to as regional and national systems of innovation....

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