Innovation and Institutional Embeddedness of Multinational Companies
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Innovation and Institutional Embeddedness of Multinational Companies

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.
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Chapter 2: Regional Embeddedness of Multinational Companies and their Limits: A Typology

Martin Heidenreich and Jannika Mattes


1 Martin Heidenreich and Jannika Mattes Multinational companies (MNCs) are important protagonists for the generation and international transfer of technological knowledge. They are responsible for most global R&D expenditure2 and provide important channels through which technological competences can be transferred across national as well as cultural and institutional borders (OECD, 2009; Dunning and Lundan, 2009). MNCs are analysed as global networks in which internationally distributed subsidiaries produce innovations in a ‘more distributed and open architecture of knowledge production and application’ (Gerybadze, 2004: 123). Complementary to this international dimension of knowledge production, other authors stress the territorial embeddedness of MNCs that do not act as ‘footloose companies’ but are able to exploit specific regional competences due to the embeddedness of their subsidiaries ‘in different local networks’ (Andersson et al., 2002: 979). Cantwell and Iammarino (2003), for example, show that MNCs spread their competence base by exploiting diversified technological competences in spatially distinct institutional and organizational settings. Taking the example of US-based semiconductor firms, Phene and Almeida (2008) demonstrate that the external availability of competences and the capability of subsidiaries to exploit them are essential for the innovativeness of a company. MNCs are therefore geographically unbound and in principle transnational networks of knowledge production, while at the same time their competences are based on learning processes and knowledge exchange in specific local contexts (Kristensen and Zeitlin, 2005). In this sense an MNC uses and combines two types of learning that are based on international yet intra-organizational relations as well as on...

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