Geography Reference
In-Depth Information
and technology have run between the US, Western Europe and East
Asia (particularly Japan, Korea, Singapore and Taiwan), suggesting that
the globalization of innovation has, until recently, rather to be seen as a
process of 'triadization' (Archibugi and Iammarino 2002; OECD 2008).
However, in the last two decades, more sophisticated innovative efforts
have gradually become geographically spread across national boundaries
too. What has emerged is that inward foreign investment by MNEs has
not preceded the occurrence of the earlier stages of innovation in eco-
nomic catching up, but rather that new locations that had already built up
sufficient absorptive capacity in the form of basic capabilities have ben-
efited from the virtuous circle spurred by MNEs operations (Athreye and
Cantwell 2007; Iammarino et al. 2008; Mudambi 2008; Fifarek and Veloso
2010). An empirical illustration of cumulative causation and interdepend-
ence between indigenous capabilities and MNE regional embeddedness in
the context of the emerging economy is reported in Box 4.4.
Furthermore, as mentioned in Chapter 2, vertical disintegration and
international outsourcing (offshoring) have recently emerged as further
modes of control and coordination of MNE activities, giving rise to what
has been labelled the 'concentrated dispersion' of geographical produc-
tion and knowledge networks of MNEs (Ernst 1997, 1998; Ernst et al.
2001; Ernst and Kim 2002). Global production networks (GPNs) capture
the spread of the value chain across firm boundaries and geographical
borders (e.g., Dicken 1994, 2003a, b, 2004, 2005, 2007; Ernst and Kim
2002; Henderson et al. 2002; Dicken and Henderson 2003; Coe et al. 2004;
Hobday et al. 2005; Hess and Yeung 2006). The GPN approach combines
together the insights of various similar perspectives, in particular those of
global commodity chains (GCCs) and global value chains (GVCs) (see,
among others Gereffi and Korzeniewicz 1994; Gereffi and Kaplinsky
2001; Gereffi 2005; Gereffi et al. 2005). Although there is a substantial
similarity among the different concepts (GPNs, GVCs, GCCs), there are
also some crucial differences. In the words of Coe et al. (2008, p.272):
'First, GCCs/GVCs are essentially linear structures, whereas GPNs strive
to go beyond such linearity to incorporate all kinds of network configura-
tion. Second, GCCs/GVCs focus narrowly on the governance of inter-firm
transactions while GPNs attempt to encompass all relevant sets of actors
and relationships'.
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GPNs integrate the dispersed supply and customer bases of large MNEs
(so- called
network flagships
), that is their subsidiaries, affiliates and joint
ventures, suppliers and subcontractors, distribution channels and value-
added resellers, as well as their R&D collaborations and different kinds of
cooperative agreements. MNEs break down the value chain into a variety
of discrete functions, operations and transactions, and locate them where
