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 7: Technological Capabilities and the Regional Embeddedness of Multinational Enterprises. A Case Study of Germany and the UK

Simona Iammarino, Jan-Philipp Kramer, Elisabetta Marinelli and Javier Revilla Diez

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

Extract

7. Technological capabilities and the regional embeddedness of multinational companies. A case study of Germany and the UK1 Simona Iammarino, Jan-Philipp Kramer, Elisabetta Marinelli and Javier Revilla Diez 7.1 INTRODUCTION The regional embeddedness of multinational companies (MNCs) has been increasingly addressed in the economics and international business literature (e.g. Phelps et al., 2003; McCann and Mudambi, 2004, 2005; Arregle et al., 2009; Dunning, 2009; Mariotti et al., 2010; Mudambi and Santangelo, 2010). In particular, empirical research has confirmed a strong regional focus of MNC research networks in Europe (e.g. Cantwell and Iammarino, 2000, 2003; Cantwell and Piscitello, 2005; Revilla Diez and Berger, 2005; Narula and Santangelo, 2009). MNCs appear to have clear geographical preferences, with R&D strategies aimed at tapping into different regional innovation systems to feed new knowledge into intrafirm global networks. In this study we look closely at the way in which MNCs become regionally embedded. We focus on leading UK and German MNCs operating in technology-intensive sectors and apply the concept of firm-level and regional-level technological capabilities. Following recent contributions (von Tunzelmann and Wang, 2003, 2007; von Tunzelmann, 2009), firms’ technological capabilities are seen as the results of adaptive learning processes that are sustained through a variety of external connections and sources for innovation, at least partially embedded in the local environment of the firm. Notably, regional capabilities are more than the sum of capabilities of each individual firm, as they rely on many systemic elements that are external to the firm but internal to the...

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