Multinationals and Industrial Competitiveness
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Multinationals and Industrial Competitiveness

A New Agenda

John H. Dunning and Rajneesh Narula

This book offers an important contribution to the contemporary debate on the role of multinational enterprises (MNEs) in economic development in an increasingly globalizing, knowledge-intensive and alliance-based world economy.
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Chapter 6: Explaining International R & D Alliances and the Role of Governments

John H. Dunning and Rajneesh Narula


6. Explaining international R&D alliances and the role of governments INTRODUCTION One of the distinctive features of the process of globalization has been the growth of cross-border value-adding activities by firms, and the subsequent increasing interdependence of economies. However, the growth of globalization has led to a chain reaction, in that there has been an increasing trend for the activities of firms (both domestically and internationally) to be undertaken not just through internalization of intermediate product markets by hierarchies (referred to as ‘hierarchical capitalism’), but through what has been coined ‘alliance capitalism’ (Gerlach, 1992; Dunning, 1995a). Specifically, alliance capitalism refers to the growing use of non-market, quasi-hierarchical modes of corporate activity, whereby firms do not completely (or formally) internalize their value-added activities, but utilize a variety of cooperative and collaborative agreements with other firms as a means to augment their own competitive advantage. This growth in the use of cooperative agreements is particularly pervasive amongst firms from industrialized economies (Hagedoorn, 1996). It is generally the case that these firms are engaged in value added activity that is capital- and knowledge-intensive. National governments are thus frequently involved in promoting the human and physical resource competitiveness within their jurisdiction. They are also involved, directly or indirectly, in the generation and diffusion of knowledge, in the sense both of technology and of acquiring access to foreign markets. This is of particular interest to governments, since these assets are crucial in determining the competitiveness of firms from these countries as well as...

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