Multinational Firms, Innovation and Productivity

Multinational Firms, Innovation and Productivity

Davide Castellani and Antonello Zanfei

This book gets to the root of how and why multinational firms differ in the cross-border creation, transfer and diffusion of technology, and provides fresh evidence on the effects that these differences have on productivity and innovation in the economic systems in which they are active.

Chapter 4: Heterogeneity Across and Within Multinational Firms

Davide Castellani and Antonello Zanfei

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


4. Heterogeneity across and within multinational firms 4.1 INTRODUCTION In Chapter 3, we highlighted that MNFs differ from exporters and from uni-national firms in terms of economic and innovative performances. Moreover, we introduced a distinction across multinationals. In fact we separated firms controlling production activities abroad from firms controlling non-production facilities only, and showed that this distinction is also associated with some diversity in performance. In this chapter we shall focus on other aspects of heterogeneity across multinationals and introduce a further dimension, that is, diversity within multinationals. To address the issue of heterogeneity across multinationals, we shall use a metaphor introduced in Part I of this volume: each MNF acts as a distinct bridging institution, connecting in a specific way different economic and innovation systems (of origin and of destination). By so doing, each multinational company absorbs and utilises different sets of capabilities and of innovative opportunities, and combines its own knowledge base with the external assets to which it has access abroad. From this perspective, constraints and opportunities that MNFs meet in their (national, regional or sectoral) systems of origin and destination, as well as the intensity and geographic spread of the connections they are able to create with different systems are fundamental sources of heterogeneity. In fact, through their specific (internal and external) networking strategies, multinationals are able to build up their competitive strengths and to differentiate their economic and innovative performances. The second key aspect of heterogeneity we shall...

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