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 10: Modes of Regional Embeddedness: Companies in Seven European Regions Compared

Dieter Rehfeld

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


1 Dieter Rehfeld 10.1 INTRODUCTION The region has by no means been rendered obsolete by globalization and a new balance has been established called ‘glocalization’. Nevertheless, studies on regional embeddedness or the regional engagement of companies often only focus on regional networks or projects. They do not say much about the meaning of embeddedness or regional engagement in the context of the company’s overall strategy. Such a perspective bears the risk of overestimating regional factors (Storper and Venables, 2004; Bathelt et al., 2004). Furthermore, we also have to keep in mind that there are strong varieties in the economic performance of regions, in regional learning and related capacity building, and in the availability of social or symbolic capital. The CURE project, ‘Corporate culture and regional embeddedness’, therefore started with the question under which circumstances are regions able to strengthen their position in a global context. In brief, the project is based on the assumption that there are differences between regions, that there is a potential option for regions to make use of the differences by mutual learning and collective actions, and that the external circumstances that support or hinder the realization of a stronger regional position change over time. The CURE project had an interdisciplinary background and in this chapter the focus is placed on regional engagement that leads to regional embeddedness. To start with, in a very first approximation, we adapt the transaction cost approach of Coase (1988) and state that a company is regionally embedded when the transaction...

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