Geography Reference
In-Depth Information
4.
The sources of innovation: the firm
and the local system
4.1 INTRODUCTION
Over recent years, the interrelationships between innovation, technology
and industrial location behaviour have come to be seen as essential fea-
tures of regional development. Technical progress has been a key element
of the major transformations brought about by globalization. In the case
of the MNE, these consist of increasing cross-border interdependence and
the integration of all kinds of operations and functions, including those
aimed at creating new knowledge and technology. On the other hand, the
importance of contextual factors and systemic interactions in the process
of the generation and diffusion of innovation has also been recognized
in the literature as a key determinant of the technological and economic
performance of firms, countries and regions. The significance of the geo-
graphical dimension of innovation systems has naturally emerged as the
logical consequence of the emphasis put on the relations with sources of
knowledge and innovation external to the firm.
The multiple linkages which exist between internal and external knowl-
edge sources and conditions will be discussed here by following a micro to
meso logic. Thus, in this chapter we will start from the firm as the main
actor at the centre of the analysis of innovation processes; then we will
move on to the industrial and geographical system, eventually integrating
the two levels of analysis with particular reference to the technological
creation and accumulation processes of MNEs.
The first two sections of the chapter are devoted to briefly recall some
of the main theoretical perspectives on the firm as the principal economic
agent and social institution generating and governing innovation and
technological change. As also explained in Chapter 1, the need for rehears-
ing here the major economic views on the growth of firms is purely func-
tional and is intended to highlight their treatment of innovation sources
and the relevance of technological competence, capabilities and learning
to growth arguments. These latter concepts find application not only at
the micro level of the firm, but also, as we will see in the following Sections
4.4 and 4.5, in the meso analysis of sectoral, technological and geographi-
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