Geography Reference
In-Depth Information
cal innovation systems, where firms - in particular MNEs - and other
economic and social actors locate and establish linkages and networks
of mutual interdependence for the creation of new technical and non-
technical knowledge.
As we have already observed, primarily in the previous Chapters 2 and
3, one of the main reasons why the case of MNEs differs from that of
multiplant domestic enterprises (MPDEs) - and even more so from that of
uni-located firms - lies precisely in the much greater variety of knowledge
sources MNEs tap into and integrate in their own innovation capabilities
and strategies. On the other hand, differentiated technological compe-
tencies and capabilities are increasingly observed to be concentrated in
particular sub-national locations. This suggests that further clarifications
need to be made as to why, how, and to what extent, locational advantages
of regions and clusters emerge and vary greatly across and within national
boundaries. The geography of knowledge sources is in fact crucial for
explaining the behaviour of the other types of MNEs reported in the
classification of Chapter 2, that is multinational firms aimed at acquiring
specific capabilities, expertise or skills in particular locality or rival firm
(i.e.
specific-
and
strategic- asset seeking
MNEs), or at restructuring across
different institutional, industrial, and policy settings in areas often charac-
terized by processes of economic integration (i.e.
scale and scope economies
seeking
MNEs).
1
The two levels of analysis of innovation and knowledge
phenomena adopted here - namely the micro and the meso - will help us
provide the reader with the basic building blocks for understanding the
phenomenon of the globalization of innovation and MNE technological
networks.
4.2
VIEWS OF INNOVATION AND THE GROWTH
OF THE FIRM
4.2.1
Traditional Economic Theory
Technological change has long been understood as a driving force of eco-
nomic growth. In its very simplest form it is treated in the neoclassical eco-
nomic theory, where firms translate inputs into outputs according to the
principle of profit maximization, and choose between productive inputs
on the basis of their relative marginal productivity. Inputs or factors
of production can be combined along a production possibility frontier,
which is assumed to be smooth, continuous, and allows for an infinite
number of possible production techniques or input combinations. The
knowledge of how to reach all points on the production possibility frontier
