Geography Reference
In-Depth Information
including that of the international diversification across products and
space firstly described by Caves (1971, 1982).
2.3.5
Resources, Technological Competence and Capabilities
The increasing attention devoted to the internationalization of one of
the major ownership advantages, that is, technological competence and
innovative activity, has resulted in a renewed questioning of the rather
narrow role conferred upon the MNE subsidiary by Vernon (1966). The
aim to redefine MNE units as key creators of innovation and technologi-
cal knowledge was originally suggested by Dunning (1970) and later devel-
oped by Chesnais (1988), Cantwell (1994) and Fors (1998) among others.
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Building on the seminal work of Edith Penrose (1959) and on evolutionary
views of technological progress, the MNE is seen as a 'bundle of produc-
tive resources and competencies', physical, human and technological,
which are idiosyncratic to each specific company, and which represent the
firm's major competitive advantage. Interestingly, as discussed in Chapter
4, in spite of the huge relevance of Penrose's work for the conceptualiza-
tion of the modern competence-based, specific-asset and strategic-asset
seeking MNE, her treatment of multinationality as a stage in the growth
of the firm, rather than as an archetype itself, has somehow borne only a
limited influence on much of the international business literature (Pitelis,
2007a, b). It has, however, provided a huge inspiration for the study of the
internationalization of MNE innovation and its technology-based owner-
ship advantages.
In the competence-based view, the geographic sources of MNE com-
petitiveness are seen to be associated with the capacity of foreign affili-
ates to generate innovation by tapping into local expertise and industrial
clustering specific advantages (Birkinshaw and Hood 2000; Mudambi et
al. 2007). Attention has therefore been increasingly paid towards under-
standing the new roles played by affiliates in the MNEs' global innovation
efforts (Pearce 1999), the development of the affiliate's strategy, and the
emergence of corporate centres of excellence (Birkinshaw and Hood 1998;
Birkinshaw 2000a; Frost et al. 2002).
Whereas the traditional subsidiary was viewed as exploiting the tech-
nological advantages (known also as capabilities and competencies) of its
parent MNE, more and more modern subsidiaries have been developing
competencies of their own, that can be leveraged to advantage throughout
the whole MNE network. Growing empirical evidence suggests that the
rising importance of networked production systems has progressed along
with major changes in the role played by modern MNE subsidiaries (e.g.,
Pine et al. 1993; Birkinshaw et al. 1998, 2002; Johnston and Menguc 2007;
