Geography Reference
In-Depth Information
of new knowledge. As is argued in Chapter 4, MNE networks for innova-
tion seem to conform to a hierarchy of regional locations, both
within
and
across
national boundaries; a hierarchy which is subject to slow change
over time. In such a context, as we have seen, if the imperative for the
MNE to create global R&D networks has grown more pressing over recent
decades, for industrial clusters and regions to reap the best technological
opportunities it is necessary to be able to attract external knowledge flows
related to the regional knowledge base (see also Menghinello et al. 2010),
as well as to produce outward knowledge flows. The complexity of MNE
activities is therefore associated with the variety of industrial clustering
possibilities, and MNE firms' dynamics are increasingly intertwined with
the technological and organizational characteristics of local contexts.
In line with the evolutionary economic geography framework, the
sectoral patterns of regional technological activities gradually change as
new industries develop and new technological linkages are forged between
sectors. Specialization and diversification tend to move along a cumula-
tive path in which the creation of new technological competencies depends
on the pattern of advantages previously established. In other words, along
with the related variety argument rehearsed above, diversification is one
of the possible forms of incremental change in the composition of the
regional innovation base, whilst in other cases regional profiles may be
reinforced and concentrated in their established areas of technological
expertise. Such forces will be a major cause underlying the evolution-
ary shifts from one main spatial typology to another, as depicted in our
dynamic framework above.
Depending on the strategy followed by the MNE its interaction with
the local environmental conditions for innovation may give rise to differ-
ent paths of evolution of regional specialisation patterns. If the strategy
of the large firm is to tap into localized specific capabilities in order to
upgrade its own technological competence, this might add substantially
to the strength of the sector in question in the host region and the tech-
nological specialization of the location is likely to be reinforced (higher
concentration). If the MNE has developed a strategy for technological
diversification through tapping into specific competencies in a range of
different 'first order' locations (Cantwell 1994),
7
some of the latter may
turn out to be comparatively advantaged by general external economies,
therefore experiencing both an impulse to centripetal forces (geographi-
cal agglomeration) and a decrease in the degree of sectoral concentration
(higher diversification) (Cantwell and Iammarino 2001).
As such, many MNEs may fit into regional profiles of specialization,
thus supporting the process of local technological concentration. In con-
trast, depending upon the initial regional technological profile, MNEs
