Geography Reference
In-Depth Information
geographical hierarchy, and upon its gradual change over time. Indeed,
as we will see in later chapters, these global-local interactions are likely
to further exacerbate the differences between localities. In the 'first order'
regional locations, MNEs' strategies for innovation aim at exploring local
knowledge and expertise, which will then be integrated within the firm to
widen the technological competence at the corporate level through the
intra-firm network. When MNE research has a pronounced exploratory
nature, it is likely to be attracted by 'first order' regions, treating them as
a source of general expertise and skills (Cantwell and Janne 1999). In such
regions, technological spillovers operate through exchanges across multi-
ple knowledge sources in and around core technological systems, creating
linkages between actors in quite separate alternative fields of specializa-
tion (Cantwell and Iammarino 1998, 2003).
A region at the top of the hierarchy is more likely to attract a broad
range of foreign innovative activities, as MNEs will generally try to
extend their established lines of specialization through intra-firm networks
(Cantwell and Iammarino 1998, 2002, 2003; Cantwell et al. 2001; Cantwell
and Noonan, 2001). However, these interactions are rather complex.
For example, as already noted, it has been shown that in the industries
in which the host location is technologically strong, the vibrant presence
of indigenous companies tends to deter foreign-owned firms of the same
industry from conducting substantial local levels of technological activity
in the region's primary technology (Cantwell and Kosmopoulou 2002).
At the same time, the strongest firms of other industries or technologies
which are not direct competitors of the local leaders may be attracted to
that location specifically because of those technologies which represent
possibilities for diversification, while a comparative local strength in an
industry encourages outward investment in foreign-located technologi-
cal activities. It also discourages the inward investment of foreign-owned
companies in the same industry. The outcome of this is that foreign pen-
etration in clusters of domestic technological excellence tends to be low in
most countries (Cantwell and Kosmopoulou 2002). On the other hand,
intermediate locations characterized by a narrower scope of technological
advantages are seen by MNEs as sources of specific capabilities in some
particular fields. These regions may therefore be negatively affected by the
innovative strategy of foreign affiliates, which in these cases follow a logic
of exploiting indigenous expertise, with the possible aim of out-competing
local rivals. In other words, as the position of a region in the hierarchy
falls, so the technological specialization of foreign-owned firms in that
region becomes more closely related to the equivalent pattern of speciali-
zation of the local indigenous firms (Cantwell and Iammarino 2003).
Indeed, at an aggregate level, most such MNE networks for innovation
