Multinationals and Economic Geography

Multinationals and Economic Geography

Location, Technology and Innovation

Simona Iammarino and Philip McCann

After more than fifty years of systematic research on multinational enterprises (MNEs) what is apparent is that there is, as yet, no unified or dominant theory of the MNE. The objective of this book is to bring into focus one particular dimension of MNE behaviour and activity that has been relatively under-researched – namely the geography of the multinational enterprise – as understood through the lens of innovation and technological change. The authors clearly demonstrate that geography is becoming increasingly important for MNEs and, in turn, MNEs are becoming progressively more important for economic geography. The pivot on which this vital relationship turns is the creation, diffusion and management of new knowledge.

Chapter 7: Multinationals, connectivity and global cities

Simona Iammarino and Philip McCann

Subjects: business and management, international business, economics and finance, economics of innovation, international business, regional economics, geography, economic geography, innovation and technology, economics of innovation, urban and regional studies, regional economics


Following the arguments in the previous chapters, the reasons why multinational firms should play an increasingly important role in shaping globalization are not dependent specifically on the structural changes – technological, institutional and organizational – which have strengthened and accelerated globalization processes. Rather, it is because of the technological capabilities, skills and knowledge assets of MNEs themselves. In the global competition of the twenty-first century, knowledge, innovation and technology become increasingly critical assets, and the structural changes which have facilitated globalization have also increased the potential returns to such intangible resources. As we have seen in Chapters 4 and 5, MNEs compete primarily on the basis of their internalized knowledge assets and also how these are employed to engage with the knowledge assets of the geographical localities in which they operate. As such, their competitive advantages arise from a variety of sources both internal and external to the firm. However, the crucial competitive advantages MNEs have are in terms of their ability to exploit their organizational capabilities and experience of operating in international markets in order to leverage the benefits from the variety of knowledge sources they are able to access. As such, multinational firms are best placed to reap the potential global rewards from globalization, and at the same time to act both as conduits and facilitators of global knowledge engagement across space.

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