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 13: The Role of Multinational Corporations in the National Innovation Systems of the EU New Member States

Rajneesh Narula and José Guimón

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


Rajneesh Narula and José Guimón 13.1 INTRODUCTION In analyses of the role of multinational corporations (MNCs) in national innovation systems, much of the literature focuses on the subject of foreign direct investment (FDI) and on knowledge flows taking place through equity relationships, be it between the parent and the subsidiary or among the partners of a transnational joint venture. For the purposes of this chapter we take a broader perspective – that of the MNC and the linkages it creates. Indeed, MNCs develop a variety of other informal and non-equity agreements to engage in knowledge exchange, including trade of products and services, technology licensing, strategic partnerships, technological collaboration and so on. Moreover, FDI should be interpreted not as a discrete, single-period flow, but as a multi-period building up of FDI stock through deepening and spreading of value-adding activities, not all of which occur as a consequence of new flows of foreign capital (Narula and Dunning, 2010). Thus, rather than FDI flows, the subsequent evolution of MNC subsidiaries should be the focus of attention. This is especially true when the objective is to attract the R&D investments of MNCs, since generally firms engage in R&D abroad either sequentially or through the acquisition of an existing foreign entity, but rarely through greenfield FDI (Costa and Filippov, 2008; Guimón, 2009). The pervasive role of MNCs in a globalizing world and their ability to utilize technological resources located elsewhere makes the use of purely national systems of innovation approach rather limiting...

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