Geography Reference
In-Depth Information
(Simmie et al., 2004; von Tunzelmann, 2003). While old social networks are generally
geographically embedded, and also rooted in historical experience implying strong social
proximity, new social networks may rely on various kinds of communities of practice
that do not necessarily require a spatial dimension, with a strong role played by rela-
tional and cognitive proximity (Boschma, 2005).
Some empirical analyses have shown that inter-industry knowledge spillovers are
likely to become more intense in centres of technological excellence, where spillovers
seem to operate mainly through exchanges in and around core technological systems (i.e.
rooted in 'general purpose technologies' such as, for instance, background engineering,
mechanical methods, electronics and ICTs), creating linkages between actors in quite
separate alternative i elds of specialisation. These centres of excellence - which are more
likely to be classii ed either as pure agglomerations or as new social networks, and show
dif erent scope for MNE presence and contribution to spillovers - experience a faster
process of convergence between old and new technologies and a potentially greater com-
petitiveness, eventually leading to processes of rise and decline of technological clusters
(Cantwell and Iammarino, 2003; see also Lambooy, Chapter 22 in this topic).
6. The dynamic relationship between MNEs and innovative clusters
The arguments developed in the previous sections allow us to ask questions concerning
how an observed industrial agglomeration may evolve over time. Once again, what is
important here is to identify which of these idealised technological types best approxi-
mates the dominant characteristics of the geographical unit under analysis. In reality,
it is likely that various mixed, diversii ed, and idiosyncratic patterns of growth can be
observed, and no linear or deterministic development path can necessarily be estab-
lished. Also, i rms are nor necessarily clustered together in space; and clusters, where
they do exist, are not necessarily innovative systems. However, in observed situations
where agglomerations have emerged over time, some particular types of evolutionary or
transition pattern are likely to be more common than others.
As widely highlighted in the literature on multinationals, the accumulation of tech-
nological competence is a path-dependent process, being partly i rm-specii c and partly
location- specii c. MNEs spread the competence base of the i rm, and acquire new tech-
nological assets or sources of competitive advantage. The strategic internationalisation
of technological operations has indicated that decisions on what and where to inter-
nationalise are strictly related to the roots of the i rm's competitiveness. An ef ective
approach to the strategic management of technological functions entails the evaluation
of the core technological competence, that is, the set of knowledge, skills and capabilities
that makes the MNE's innovative capacity unique and original: the locational choice is
part of the strategy and a central issue to optimise technological ef ectiveness and growth
(Chiesa, 1995).
The change in MNE strategies towards a growing degree of cross-location coordina-
tion of their operations requires an organisational structure that could not have been
developed through purely arms-length market-based coordination between geographi-
cally separated units. Transaction costs may shrink with integrated governance of units,
whatever units are considered to be, either ai liates or dif erent locations (Dunning and
Robson, 1987). Hence, the transaction cost approach, focusing basically on benei ts in
terms of short-term ei ciency and l exibility, fails to take into account the knowledge
