Table of Contents

Innovation and Institutional Embeddedness of Multinational Companies

Innovation and Institutional Embeddedness of Multinational Companies

New Horizons in International Business series

Edited by Martin Heidenreich

Multinational companies are crucial actors in a global knowledge-based economy, combining the advantages of global and locally coordinated production and innovation strategies with specific regional and national factors. This book questions how MNCs can best exploit institutionally embedded knowledge, explores the utilization of external institutionally embedded knowledge in corporate innovation processes, and addresses the challenges of embeddedness.

Chapter 1: Introduction: The Debate on Corporate Embeddedness

Martin Heidenreich

Subjects: business and management, international business, organisational innovation, economics and finance, international business, innovation and technology, organisational innovation


Martin Heidenreich Some time ago, my students and I visited the divisional headquarters (HQ) of a multinational company (MNC) to find out how it organized its innovation processes. One of the company’s representatives explained that it operates in most countries of the world, that two-thirds of its staff are employed abroad and that its research facilities are spread all over the world. He emphasized the strength of these foreign research and development (R&D) sites, the high technological competences of its employees, and the public support for and generally positive attitude to innovation in many foreign countries. In a publication, the company stressed the necessity ‘to think and act internationally’ because ‘the significance of national economies is declining’. We were deeply impressed because obviously the company was able to make full use of the advantages of a global economy without any problems. However, the representative then explained how the innovation process was organized for one of the most successful product lines of his division and this proved to be much less internationally structured than anticipated. Most of the R&D for that product line still took place about ten miles away from the divisional HQ – close to its central production site and close to many important internal and external suppliers. Only in the last decade was a Chinese R&D unit set up for a product designated especially for the Chinese market and which took into account the specific budget constraints and requirements of developing countries. Even though the technological...