Geography Reference
In-Depth Information
national boundaries, the firm is thus able to benefit from the dynamic
economies of scope that derive from the technological complementarities
between related paths of innovation in spatially distinct institutional set-
tings (Cantwell and Iammarino 1998, 2003; Cantwell and Noonan 2002;
Cantwell and Piscitello 2007; Iammarino et al. 2001; Kramer et al. 2011).
Inter-firm networks established between an MNE's foreign affiliates
and local firms and actors mean that the MNE's sources of knowledge
for innovation increasingly extend beyond their internal resources, and
encompass the relations of affiliates with their external environment
(Almeida 1996; Almeida and Kogut 1999). For their part, indigenous
firms and local innovation systems may benefit from a variety of linkages
and externalities from MNEs, given the access of the latter to complemen-
tary streams of knowledge being developed in other regions or clusters. A
detailed case study illustrating such interactions in the regions of the UK
and Germany is reported in Box 4.2.
In this way, MNEs spread the competence base of the firm and acquire
new technological assets, or sources of technological advantage. As also
discussed above, resources and capabilities that are critical for firms' com-
petitive success 'can often be found inside a region, rather than within any
single firm' (Enright 1998, p. 315). Hence, the MNE assumes a critical role
in bridging capabilities at both the micro and the system level. From the
point of view of the latter, MNEs can therefore be seen at the same time as
being both 'internal' actors, contributing to the creation and diffusion of
new technical knowledge within the region, and also as 'external' players,
channelling knowledge created elsewhere within the firm into the local
system. As such, the MNEs can play the role of technological 'gatekeep-
ers', influencing the regional knowledge base without necessarily being
located
in situ
, as in the case of global buyers or distributors.
Scale and scope economies in research and technological activities,
which allow for the solving of problems at a very high degree of tech-
nological complexity, are primarily a prerogative of large firms, and in
particular of MNEs. On the other hand, the local knowledge-related
external economies available to an MNE also depend on the incremental
innovative processes within small and medium sized enterprises. Indeed,
the nature and extent of local knowledge externalities within a region
cannot be separated from the patterns of collaboration and competition
between small and medium-sized local firms, as well as those with the large
indigenous firms and MNEs. As discussed previously, all these factors are
largely characterized in the technological regime prevailing in the regional
system or industrial cluster.
From the point of view of MNEs' locational choices, although it is dif-
ficult to define the 'optimal' cluster or region as the cluster boundaries
