Geography Reference
In-Depth Information
making an analytical focus on the industry level more problematic (Ernst et al., 2001).
On the other hand, the labour cost argument seems more apt to explain the geographic
dispersion of global value chains across macro-areas - and in particular the relocation
of economic activities in general from advanced to emerging or less advanced economies
- than to deal with spatial agglomeration phenomena occurring today in both indust-
rialised and developing countries. Therefore, the rationale to explore the current patterns
of clustering by MNEs' innovative and technological operations has shifted away from
locational choices driven by the technology content dichotomy towards the organisa-
tional and institutional logic underlying both the i rm and the host location.
Concentrated dispersion goes hand in hand with increasingly complex and systemic
forms of integration through global networks. Knowledge l ows and technology trans-
fer occur as a consequence of new organisational modes within and outside the MNE,
depending on the characteristics of dif erent localised institutional settings involved in
the network. Even i rms that are labelled on the basis of the same industry- or sector-
specii c features (such as high- or low-tech) may dif er greatly in terms of technological
base, use dif erent sources of innovation, and display specii c patterns of interactions
with local environments. This degree of complexity is all the more true when looking at
multi-product and multi-technology i rms, such as most contemporary large MNEs, that
are likely to follow a variety of organisational modes and technological strategies across
multiple locations.
The role of MNEs as creators of new technology (and not just as international transfer
vehicles) has been facilitated by the trend for MNEs to establish internal and external
networks for innovation. Internationally integrated networks within the i rm may lead,
through a greater focus in the specialisation of technological ef orts in ai liates, to an
improvement of innovation capacity both of the i rm and of the host location. Inter-i rm
networks established between MNE ai liates and local i rms may, in addition, amplify
the advantages of geographical agglomeration in some particular lines of technological
development. In other words, in order to renovate existing competencies, it is generally
necessary for a i rm to extend those capabilities into new related i elds of production and
technology, and across a variety of locations (Cantwell and Iammarino, 2003).
The i rm is thereby able to benei t from the dynamic economies of scope that derive
from the technological complementarities between related paths of innovation in spa-
tially distinct institutional settings. In this perspective, MNEs spread the competence
base of the i rm and acquire new technological assets, or sources of technological advan-
tage. Resources and capabilities that are critical for i rms' competitive success 'can often
be found inside a region, rather than within any single i rm' (Enright, 1998, p. 315). For
their part, indigenous i rms may in principle benei t from localised knowledge spillovers
from MNEs, given the access of the latter to complementary streams of knowledge being
developed in other regions or clusters.
The precise form that knowledge networks take, and their ef ects, depend on many
factors, among which are the knowledge base of the MNE, the nature of agglomeration
forces that shape the spatial organisation of economic activities, the type of transactions
and relationships between global and local i rms, the intra-cluster absorptive capacity,
and the extra-cluster linkages (Bell and Albu, 1999; Giuliani, 2005, and Chapter 12 in
this topic). Knowledge networks will be obviously af ected by industry structures and
sectoral compositions. Scale and scope economies in research and technological activi-
