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Location strategy in cluster networks

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This article investigates the location strategies of Canadian and Chinese multisite firms in international and domestic investment decisions at the metropolitan level. By integrating research from international business studies and economic geography, we combine knowledge-based understandings of multinational corporations and industrial clusters to develop propositions regarding the location strategies of multisite firms in cluster networks. It is argued that firms from clusters are more likely to adopt knowledge strategies than firms from other areas and that they tend to choose cluster locations that are specialized in the same or similar industries to achieve their knowledge goals – both in domestic and international investment decisions. We establish and analyze a database of 3500 investment cases within and between Canada and China to test our propositions. The results show that firms in knowledge-intensive industrial environments with substantial business experience are especially inclined to direct their investments to clusters. Consistent with our emphasis of the subnational as opposed to the national scale, we find that cluster-of-origin effects are more important than country-of-origin effects in explaining firms’ investment choices in clusters. These findings support the idea that multisite firms, particularly MNEs, leverage local knowledge pools by strategically locating affiliates across clusters.

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... Defined as "the geographic concentrations of interconnected companies and institutions in a particular field" (Porter, 1998), the clusters act as the basic territorial unit in the regional innovation ecosystem (Li & Bathelt, 2018;Sultana et al., 2023;Turkina et al., 2020). The clusters' configurations highlight three crucial conditions in the establishment of regional innovation ecosystems: (1) the spatial closeness among colocated actors in agglomerated areas, (2) the social ties among interconnected and interdependent actors in business networks, and (3) the coordination of relationships among co-located actors involved in specialized economic activities (Torre, 2014). ...
... In economic terms, co-location with similar and related companies reduces production costs and enhances the operational efficiency of embedded members who share infrastructure and reduced transportation costs (Bathelt et al., 2004;Malmberg & Maskell, 1997;Torre & Gilly, 2000). Moreover, the close geographical distance and familiar social context contribute to the common knowledge base and industrial capability building, and they foster a consensus of social norms and values among co-located members (Li & Bathelt, 2018;Phelps, Accepted Article 2010; Sultana et al., 2023;Turkina et al., 2020). Nonetheless, geographic proximity does not necessarily guarantee actual interaction and subsequent knowledge spillovers without considering the organizational and social contexts (Bell & Giuliani, 2007;Mariotti et al., 2010;Shearmur et al., 2023). ...
... Thereafter, these colocated stakeholders form cluster agglomerations with a high degree of geographical proximity and industrial specialization (Jaffe et al., 1993;Malmberg & Maskell, 1997;Torre & Gilly, 2000). On the other hand, coordinated by global value chain mechanisms, specialized regions become interconnected in the international innovation network, whereas stakeholders in local cluster agglomerations can establish collaborative linkages with global partners through cross-border pipelines of trade and FDI flows (Bathelt et al., 2004;Li & Bathelt, 2018;. ...
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This paper investigates the territorial governance mechanisms of proximity-based cluster agglomerations and organized proximity-based cluster communities. We argue that the territorial governance mechanisms of clusters consist of the locations of members, the organizational logics, and the roles of institutional intermediaries. Based on the compared case studies of Cité Biotech (Canada) and Polepharma (France), we address the similarities of both types of clusters in terms of local agglomeration, diversity of cluster members, and institutional intermediaries' roles as brokers and facilitators. We also highlight their differences in external pipelines, logic of belonging, and intermediaries' roles as mediators, orchestrators, and innovators in the cluster community. Finally, we conclude with the strategic implications for innovation cluster territorial governance. Cet article a été accepté pour publication et a fait l'objet d'une évaluation complète par les pairs, mais il n'a pas été soumis au processus d'édition, de mise en page et de relecture, ce qui peut entraîner des différences entre cette version et la version publiée. Veuillez citer cet article comme suit This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process which may lead to differences between this version and the Version of Record. Please cite this article as : Este artículo fue aceptado para publicación y sometido a una revisión completa por parte de pares, pero aún no ha pasado por el proceso de edición, maquetación, paginación y corrección de pruebas lo cual podría dar lugar a diferencias entre esta versión y la versión publicada. Por favor, cite este artículo de la siguiente manera Abstract: This paper investigates the territorial governance mechanisms of proximity-based cluster agglomerations
... On the other hand, INVs' innovations are influenced by its regional environment, particularly local clusters (Cavusgil and Knight 2015). Although scholars have explored how a single industrial cluster influences INVs, they have overlooked the fact that many cities and metropolitans generally contain two or more clusters, which form different regional multi-cluster diversities (Bathelt and Zhao 2016;Li and Bathelt 2018). Merely considering a single cluster's effect on INV but ignoring multiple clusters' effects encounters the missing variable bias, which is a serious problem that causes research results to become imprecise and inconvincible. ...
... Many cities and metropolitans generally contain more than one cluster, which form different types of regional multi-cluster diversity (Bathelt and Zhao 2016;Li and Bathelt 2018). When multiple clusters are co-located in geographic proximity (Bathelt and Li 2014), they show various features that differ from a single cluster. ...
... The coexistence of multiple clusters can provide abundant heterogeneous and substitutable resources compared to the impact of a single cluster (Li and Bathelt 2018), which reduces the level of competition for resources among firms and significantly increases the availability of resources (Fernhaber et al. 2008). This enables INVs to easily compete for high-quality resources (such as experienced talents). ...
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The purpose of this article is to study how the innovation performance of international new ventures (INVs) evolves over time, and how multi-cluster diversity as an external environment moderates INVs' innovation performance. We employed the latent growth curve modeling (LGCM) approach to analyze 5,744 INVs from 21 cities in the Guangdong Province (China). We found that INVs' innovation follows a positive linear trend over time, and that multi-cluster diversity plays a positive moderating role. Our findings enrich international entrepreneurship by showing the long-term effect of early internationalization on INVs' innovation under a multi-cluster environment.
... After analysing 3,500 investment cases in Canada and China, Li and Bathelt (2018) concluded that companies operating in a knowledge-based manufacturing environment with significant business experience are particularly inclined to focus their investments in clusters. Focusing on the subnational rather than the national scale, the researchers found that the effects of the cluster of origin are more important than the effects of the country of origin in explaining the investment choices of firms in clusters. ...
... Focusing on the subnational rather than the national scale, the researchers found that the effects of the cluster of origin are more important than the effects of the country of origin in explaining the investment choices of firms in clusters. Thus, diversified firms, especially multinational corporations, use local knowledge pools by strategically locating branches in clusters (Li and Bathelt, 2018). Clusters are one of the main sources of competitiveness not only for multinational corporations but also for medium and small enterprises. ...
... The development of mutually beneficial cooperation of industrial enterprises is one of the important tasks to overcome the weak competitiveness of the industry for the production of building materials. The natural and expedient step for the development of the construction complex of the economy is the formation of the industry of the cluster of construction materials, which will include large construction enterprises, small and medium-sized enterprises of the construction industry, which, by synergising common efforts, optimising the use of existing infrastructure and the availability of necessary resources, by reducing production costs, will be able to ensure the effective development of the construction industry of the region, creating new competitive products and services, expanding the range of services provided (Li and Bathelt, 2018;Chaudhary et al., 2020). ...
... Headquarter view. From an HQ perspective, larger numbers of foreign subsidiaries provide access to more markets, knowledge, resources and economies of scope/scale while decreasing firms' risk (Contractor, 2007;Geringer, et al., 1989;Grant, 1987;Hitt, et al., 1997;Jim enez-Jim enez et al., 2014;Li and Bathelt, 2018), which can positively affect financial performance. However, with larger subsidiary networks, HQs must deal with the challenges of trans-local knowledge management (Li and Bathelt, 2018;Meyer et al., 2011) as well as greater costs of doing business abroad (Ghemawat, 2001;Hymer, 1960;Zaheer, 1995). ...
... From an HQ perspective, larger numbers of foreign subsidiaries provide access to more markets, knowledge, resources and economies of scope/scale while decreasing firms' risk (Contractor, 2007;Geringer, et al., 1989;Grant, 1987;Hitt, et al., 1997;Jim enez-Jim enez et al., 2014;Li and Bathelt, 2018), which can positively affect financial performance. However, with larger subsidiary networks, HQs must deal with the challenges of trans-local knowledge management (Li and Bathelt, 2018;Meyer et al., 2011) as well as greater costs of doing business abroad (Ghemawat, 2001;Hymer, 1960;Zaheer, 1995). Accordingly, a number of scholars have identified a variety of nonlinear relationships between multinationality RIBS 33,1 and firm performance (Lu and Beamish, 2004;Qian et al., 2008;Qian et al., 2010;Shin and Lee, 2019;Tsai, 2014), while others found no substantial relationship between network density and firm performance (Berry and Kaul, 2016;Marano et al., 2016). ...
... In the context of global expansion and the associated complexities that MNCs must orchestrate, the task is further exacerbated by managing an MNC network that has a high number of subsidiaries competing for resources from HQs. While a large network of international subsidiaries may provide access to knowledge and resources for the firm (Hitt et al., 1997;Jim enez-Jim enez et al., 2014;Zhang, 2021) and corporations may seek to maximize the number of foreign subsidiaries they have, MNCs must also consider its potential negative impacts, including increased competition among subsidiaries for both attention and resources from the parent Cerrato, 2006;Yu et al., 2019) and difficulties navigating translocal knowledge management (Li and Bathelt, 2018;Meyer et al., 2011). Meanwhile, if these subsidiaries happen to also be highly geographically dispersed, then there is likely a greater strain on the orchestration ability of the MNC to facilitate exchange of resources/information across more distant markets (Asakawa et al., 2018). ...
Article
Purpose In today’s ever-increasing context of volatile, uncertain, complex and ambiguous market conditions, the shifts of countries’ protectionist policies toward inward Foreign Direct Investment (FDI), and an increased gap between headquarters’ (HQ) and subsidiaries’ perspectives on what makes business sense, it has become apparent that challenges toward foreign expansion are becoming more severe and require a multidimensional dynamic approach. The authors draw from orchestration theory, dynamic capabilities literature and previous literature on dimensions of internationalization [specifically, density, geographic distance and degree of diversity of the multinational corporation (MNC) subsidiary network] to argue that firms must enhance their orchestration capability. In doing so, this study aims to highlight the nuances of orchestrating a three-dimensional (3D) conceptualization of MNCs’ international configurations. Design/methodology/approach The authors analyzed the patterns of configurations that are adopted by MNCs. This sample was made up of the international configuration of 78 Fortune 500 MNCs consisting of 3,318 foreign subsidiaries. Furthermore, the authors examined the impact of different configurations of the 3Ds on firm performance using ordinary least squares regression analysis. Findings While the research did indicate that the sample MNCs adopted the sample configurations of the three internationalization dimensions more frequently than others, the authors found that orchestrating MNCs with an international configuration characterized by high density, low geographic distance and low internetwork scope diversity had a positive impact on firm performance. Practical implications While international expansion is often motivated by financial performance or market/resource gains, it is also impacted by the firm’s dynamic capability profile. Thus, as MNCs seek to continue to expand globally, they must assess and, if needed, develop their management team’s orchestration capability, which includes effectively determining how the addition or removal of a subsidiary will impact the density, geographic distance and diversity dynamics of the MNC’s international configuration. Finally, the management team needs to be able to devise plans to respond to the potential challenges associated with each of these dimensions. Originality/value The contribution of this study includes bringing a dynamic capabilities lens to the extant international business literature examining the multinationality and performance relationship by highlighting the importance of an MNC’s process orchestrating capability that is needed for firms to effectively manage increasingly complex subsidiary networks. It also conceptually explains and empirically supports that some configurations are likely to yield higher returns than others, which can act as a guide for firms as they are seeking to expand in more geographically distant as well as diverse sectors. Furthermore, this study highlights the need for a multidimensional simultaneous approach to the examination of internationalization to performance relationship. Finally, it highlights the tradeoffs that MNCs must address across the orchestration of the three internationalization dimensions using a dynamic capabilities theoretical lens that acknowledges the differences in perspective that exist between HQs and subsidiaries.
... The recent global transformations pose major challenges for industrial clusters and industrial districts (IDs), which traditionally rely on accumulation of endogenous knowledge through a dynamic system of informal local interactions (Markusen, 1996;Dunford, 2006;De Propris & Lazzeretti, 2009). In the fast-changing world of technology, localized learning is still relevant, but no longer sufficient to ensure the degree of sophistication and technological advancement required to foster local economic growth (Li & Bathelt, 2018). The inability of ID firms to tap into external knowledge pools can generate detrimental effects, such as technological lock-in and over-embeddedness, eventually fading the advantages associated with agglomeration economies (Giuliani & Rabellotti, 2017). ...
... The literature on industrial agglomeration has shown that clustering generates multiple advantages for firms, ranging from labour market pooling to the availability of specialized input suppliers (Delgado et al., 2014). One of the main benefits of geographical proximity is the opportunity for local actors to exchange know-how on a regular basis, exploiting repeated face-to-face contacts and employees mobility (Felzensztein et al., 2010;Li & Bathelt, 2018). The majority of these daily interactions occur at the informal level and facilitate the creation of a shared system of values in the local community, increasing generalized trust and reducing transaction costs (Dunford, 2006). ...
... Therefore, the success of ID and cluster firms has been increasingly associated with the ability to tap into more distant knowledge pools Turkina & Van Assche, 2018). Translocal linkages are beneficial in that they enhance resource flows between the local network and the external environment, facilitating knowledge exchange and technological upgrade (Bathelt et al., 2004;Lorenzen & Mudambi, 2013;Li & Bathelt, 2018). By accessing distant knowledge, local actors can overcome their weaknesses, preventing the risk of technological lock-in and avoiding cognitive inbreeding (Li & Bathelt, 2018). ...
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This paper discusses the impact of formal cooperation on the performance of Italian firms operating inside and outside industrial districts (IDs). The analysis is focused on a policy tool (Contratti di Rete or network agreements) introduced in Italy to promote the use of non-equity alliances among smaller firms. We claim that the impact of both inward-and outward-looking partnerships is moderated by the local environment in which member firms are embedded. The results show that the benefits from the policy measure are more evident for outward-looking agreements that do not involve ID firms. Inside IDs, firms do not seem to be capable of reaping significant gains from the use of formal cooperation. From a policy perspective, our findings suggest that decision-makers should tailor their interventions to the features of the local economic environment, promoting strategies aimed at maximizing the outcomes of formal cooperation while accounting for geographical differences.
... Given the characteristics of global cities, they are also expected to be strong attractors of global research and development (R&D) investments of MNCs. Prior work has examined R&D location decisions at the country level (e.g., Bas & Sierra, 2002;Belderbos et al., 2017bBelderbos et al., , 2017cKumar, 2001), at the level of regions or cities within specific countries (Abramovsky et al., 2007;Autant-Bernard, 2006;Belderbos et al., 2020;Li & Bathelt, 2018), at the level of regions within Europe (Basile et al., 2008;Belderbos & Somers, 2015;Belderbos et al., 2014;Siedschlag et al., 2013), or in cities in the context of manufacturing-R&D collocation propensities (Castellani & Lavoratori, 2020), but has not specifically examined R&D investments in global cities. 1 In this paper, we contribute an analysis of the R&D investment location choices of multinational firms among the world's major global cities. We argue that even given their general attractiveness as location of MNC activities, there is substantial heterogeneity in the strength of locational factors attracting R&D investments across global cities, with cities heterogeneously positioned to serve as hotspot of innovation. ...
... We contribute to the literature on global cities (Asmussen et al., 2019;Belderbos et al., 2020Belderbos et al., , 2017aBlevins et al., 2016;Clark, 2016;Derudder et al., 2015;Derudder & Taylor, 2018;Goerzen et al., 2013;Sassen, 2001Sassen, , 2006Wall & van der Knaap, 2011) by highlighting their heterogeneous roles in global innovation and as hotspots of multinational R&D activity. We contribute to the stream of literature on regional R&D investments and regional innovation performance (Abramovsky et al., 2007;Autant-Bernard, 2006;Basile et al., 2008;Belderbos et al., 2014Belderbos et al., , 2016Belderbos & Somers, 2015;Breschi & Lenzi, 2015;Cantwell & Piscitello, 2005;Essletzbichler, 2015;Li & Bathelt, 2018;Rigby, 2015;Siedschlag et al., 2013;Verginer & Riccaboni, 2021) by showing the important and systematic heterogeneity in the city-level drivers of R&D investments and the differences between R&D investments. ...
... Knowledge generated by local firms and universities is an important source of geographically bounded knowledge spillovers benefitting R&D activities of foreign firms. Agglomeration advantages tend to be strongest for firms' R&D activities, leading to patterns of strong geographic concentration (Alcacer, 2006;Audretsch & Feldman, 1996;Hilber & Voicu, 2010;Jofre-Monseny et al., 2011;Li & Bathelt, 2018;McCann & Mudambi, 2004;Rosenthal & Strange, 2003). Co-location facilitates knowledge spillovers and the creation of knowledge networks (Maggioni et al., 2007) through formal interactions and informal encounters in which tacit knowledge is exchanged (Boschma, 2005;McCann, 2011), allowing cities to develop new knowledge often based on existing strengths (Essletzbichler, 2015;Rigby, 2015). ...
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Large, internationally connected cities are important hubs of innovative activity, yet research on the attractiveness of such ‘global’ cities for research and development (R&D) activities by multinational corporations (MNCs) is scarce. We posit that factors determining cities’ potential to attract R&D investments by MNCs differ depending on the type of R&D investments: research or development. We investigate the heterogeneous determinants of location choices for 1537 cross-border R&D investments by 633 MNCs in 55 global cities during the period 2003–12. The findings suggest that cities’ technological and university strengths are stronger attracting factors for research activities, while global cities’ market potential and intellectual property rights protection attract investments in development activities. Implications are discussed.
... Locating in industrial cluster has many benefits and challenges, which could have different effects on different firms depending on how firms treasure the advantages and how they can deal with the challenges. Li and Bathelt (2018) have argued that firms' specific characteristics would affect their choice to invest in foreign industrial clusters. Firms which originate from industrial clusters and developed countries are more inclined to choose industrial clusters, as they are born in highly innovative and competitive environments. ...
... Another definition of location quotient is based on the number of employments in an industry in a certain region. Evidence has shown no significance in measure effects between the two methods, as they both represent the level of specialization of an industry in one region (Li and Bathelt 2018). Therefore, we specify the location quotient as: ...
... (2) the proportion of top managers with PhD degree and above. Fourth, to control for the industry group, we extend the method of Li and Bathelt (2018) and divide all 27 industries into 7 industry groups, and include industry groups fixed effects in all regressions. Finally, we use the logit regression model to test our model. ...
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This article investigates the role of firm’s top management team (TMT) in its location strategy in oversea investment decision. From the perspective of the upper-echelon theory and knowledge-based view, we study how knowledge-related characteristics of TMTs, such as education background, foreign experience and R&D experience affect the firm’s oversea location choice to invest in an industrial cluster. Using data of OFDI cases from Chinese firms to European sub-national regions from 2006 to 2016, we find that: (1) TMT’s education background has a positive effect on firm’s OFDI decision in industrial clusters; (2) TMT’s foreign experience has a positive effect on firm’s OFDI decision in industrial clusters; (3) TMT’s R&D background increases the firm’s likelihood to invest in industrial clusters. Our findings provide implications related to the effects of TMT characteristics on emerging market firms’ oversea investment activities.
... MNEs in knowledge-intensive sectors continually search for new sources of knowledge and capabilities to develop and maintain their competitive advantage (Bathelt and Cohendet 2014;Li and Bathelt 2018). Even new and smaller MNEs leverage both cost-and capability-related opportunities in foreign locations (Narula and Dunning 2010, 278); increasingly, they are 'born global' . ...
... Additionally, it is noteworthy that the strategic asset-seeking MNE subsidiaries in the Ruta-N sample were not associated with the localised knowledge creation with other stakeholders (cf. Dunning and Lundan 2008;Li and Bathelt 2018;. These findings suggest that the emerging investment hub lacks specialised or advanced resources or that there are significant knowledge or technological gaps between the strategic asset-seeking MNEs and the local economy. ...
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Foreign direct investment (FDI) flows are increasingly global, diverse, and knowledge intensive. However, existing research predominantly focuses on those involving advanced and leading emerging economies and large multinational enterprises (MNEs), overlooking FDI flows to and from the more diverse economies of the Global South and the role of smaller MNEs, which also significantly impact technological advancement in the South. This oversight also limits the understanding of the range of contextual factors influencing FDI flows and MNE operations, as the Global South is effectively reduced to a few more technologically advanced and globally connected sites. While many aspects of the emergence of such advanced sites in cities with abundant pools of skilled labour are well researched, no established research field has systematically and comprehensively explored how technologically less advanced and less resource-endowed cities, on the whole, engage in the transformations that turn them into investment hubs. This thesis aims to fill this gap by examining, first, what drives diverse FDI flows to emerging economies and, second, Medellín’s rise as a destination for MNEs in the information and communication technology (ICT) sector. It employs mixed methods to link an analysis of macrolevel country attractiveness and local explorations of the impact of MNE activities and the role of global policy and planning trends in urban development efforts. It provides a multiple-perspective understanding of how cities in emerging economies can enter the global competition for FDI by creating conditions that attract knowledge-intensive MNE activities. Informed by Medellín’s transformation, this study presents a conceptual model outlining general categories of strategic activity crucial to the evolution of emerging cities into investment hubs. The model enhances explanatory clarity regarding key elements of the process and offers a framework for exploring city-specific strategies fostering similar transformations in emerging economies.
... Previous studies have shown that knowledge clusters and technological spill-over are location advantages that encourages inward FDIs (Alca´cer et al., 2016;P. Li & Bathelt, 2018). However, given the paradigm shift in the new norm, MNEs can potentially discard the brick-andmortar model by choosing to access global talents virtually without physically relocating to a host-location (Hitt et al., 2021). In such a scenario, agglomeration, clusters, and spill-overs are preceded by virtual capability and digitalization ...
... ability of the host location to focus on industry innovativeness directly influence FDI considerations (Cano-Kollmann et al., 2016;Doh et al., 2009;Mi et al., 2020). Innovation capability also increases location attractiveness through creation of knowledge and technological clusters (Alca´cer et al., 2016;Chung & Yeaple, 2008;Du & Krusekopf, 2023;P. Li & Bathelt, 2018). IB scholars have vastly explored how concepts of industrial agglomeration and spatial clusters influence innovation outcomes and in turn drive decision of where to locate (Mudambi et al., 2018;Turkina & Van Assche, 2018). Strategic asset-seeking MNEs expand to foreign locations to gain access to technology, skills or knowledge base whi ...
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Plain language summary Whilst traditionally the offshoring spatial dimensions have been largely predictable, the emergence of Covid-19 and technology revolution has significantly altered the playing field. The traditional factors which influenced host location attractiveness in the past may no longer be applicable. There is an impending need to identify the determinants which are relevant and applicable in the new norm. Moreover, despite the intellectual continuity and diversity driving the premise of FDI-foreign location research stream, a comprehensive literature review of location attractiveness is lacking, especially in the context of the new norm. With these in mind, this paper systematically reviews the theoretical and empirical research on FDI location by analyzing 221 articles published between 1999 and 2023, to identify the emerging trends on what makes a location attractive for FDIs by MNEs. Through rigorous content analysis, the emerging themes and trends on locational studies were first identified, and subsequently these were linked to recent global phenomenon (Industry 4.0 led digitalization and disruptive technologies and ripple effects from Covid-19 pandemic) to draw implications on the critical factors which influence host-location attractiveness in the new norm. Based on the review, five key determinants were predicted to have a dominant influence: human capital investment, absorptive capacity, knowledge creation, innovation capability, and ICT infrastructure advancement. These factors can be exploited to create or upgrade competitive advantages in order to amplify host location attractiveness. Future research avenues are also recommended based on the findings from this review.
... MNEs in knowledge-intensive sectors continually search for new sources of knowledge and capabilities to develop and maintain their competitive advantage (Bathelt and Cohendet 2014;Li and Bathelt 2018). Even new and smaller MNEs leverage both cost-and capability-related opportunities in foreign locations (Narula and Dunning 2010, 278); increasingly, they are 'born global' (Øyna and Alon 2018). ...
... Additionally, it is noteworthy that the strategic asset-seeking MNE subsidiaries in the Ruta-N sample were not associated with the localised knowledge creation with other stakeholders (cf. Dunning and Lundan 2008;Li and Bathelt 2018;Mudambi and Swift 2012;Narula and Dunning 2010). These findings suggest that the emerging investment hub lacks specialised or advanced resources or that there are significant knowledge or technological gaps between the strategic asset-seeking MNEs and the local economy. ...
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This paper contributes to understanding the potential for localised knowledge creation that can be generated by multinational enterprise (MNE) entry into cities in the global South from both the MNE and the local economy’s perspectives. It presents a qualitative analysis of the activities of the MNE subsidiaries in the information and communication technology (ICT) sector in an emerging investment hub in Medellín, Colombia. The analysis differentiates between the MNEs’ local strategies to explore distinct configurations of MNE–local economy relations and their potential for unilateral or mutually beneficial knowledge creation. The findings suggest that the synergy between the MNE strategies and the evolving knowledge environment in the local economy increases the potential of the MNEs’ activities for interactive and mutually beneficial knowledge and capability creation with other local stakeholders. In Medellín, these effects predominantly concerned the market-seeking MNEs, not those seeking strategic assets, as expected by evidence in the literature. They also revealed how the specific MNE strategies tended to use and influence the creation of local knowledge resources, which helps shape policies that indiscriminately aim to attract all kinds of knowledge-intensive MNE activities to emerging investment hubs.
... To understand the regional consequences of a public R&D policy that seeks to maximise return on investment, we can gain insights from research on the geography of firms' R&D investments (e.g., Autant-Bernard, 2006;Basile et al. 2008;Castellani and Lavoratori, 2020). Business R&D tends to be attracted by agglomeration economies and the availability of skilled labour (Siedschlag et al. 2013;Belderbos and Somers, 2015;Li and Bathelt, 2018). Factors such as market size, intellectual property rights protection and other policies, such as tax incentives, also play a role (Du et al. 2022). ...
... This result is attributed to these organizations' ability to build upon or import capabilities originally developed elsewhere through their networks, although in most studies the specific mechanisms have not been directly examined. In that vein, (Bathelt and Li 2020) conceptualize multilocational firms as pipelines of information and knowledge flows connecting regions together and established through a process going from location choice to embeddedness -an idea empirically supported by case studies on clusters in Canada and China (Bathelt and Li 2014;Li and Bathelt 2018). ...
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This study investigates the origins and evolution of technological complexity inCanadian regions using patent records linked to firm-level ownership and geograph-ical data. Since 2000, larger Canadian cities have experienced a notable increase inlevels of technological complexity. The analysis examines the determinants of thiscomplexity, with a particular focus on the role of intra- and inter-firm collaborationsacross different geographical scales. The findings reveal the significant contributionsof multilocational firms and intra-organizational collaborations to the developmentof more complex technologies in regions. Further analysis shows that the introduc-tion of complex technologies does not stem from novel recombinations of componentsbut rather from combinations developed internationally by firms, often coupled withcombinations originating within the host region.
... Hatzichronoglou's classification and its later versions published by the OECD are still very popular and frequently used in the literature (e.g. Silva & Lima, 2017;Li & Bathelt, 2018;Peretz et al., 2018;Campi et al., 2019;Lee et al., 2019;Garavan et al., 2020;Nikiforou et al., 2020). Some authors simplify it by combining certain categories, for example high with medium-high and medium-low with low (e.g. ...
... The scale and intensity of the international exchange of knowledge and technology have increased so much that this phenomenon is called "techno globalism". Globalisation is driven by transnational corporations (TNCs), which act as a "conveyor of external knowledge", connecting different regions and facilitating the transfer of knowledge between countries (Subramaniam, 2006;Li & Bathelt, 2018;Bathelt & Li, 2020). They are interested and engaged in R&D collaboration, technology discovery and technology transfer, the three most commonly known sources of knowledge transfer (De Rassenfosse & Seliger, 2020). ...
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The article discusses the problems of the quality of scientific space. The purpose of the article is to identify trends in the spatial dynamics of Kazakhstan’s scientific potential and challenges for science and technology policy caused by spatial imbalances. The methodology for analyzing and assessing the quality of the scientific and technological space is a modification and adaptation of the methodology for assessing the quality of the economic space. Indicators are proposed to describe such characteristics of the quality of the scientific and technological space as density, placement, differentiation and asymmetries. An analysis of the quality of the scientific and technological space of Kazakhstan was carried out, its features were identified such as a significant level of spatial differentiation in density, location, intensity, asymmetry in the main components of potential, which increased significantly taking into account the new structure of the administrative-territorial structure of Kazakhstan. There is a weak relationship between the level of R&D costs and innovation activities, and the low role of leading regions in the field of R&D in the innovative activities of enterprises. A number of conclusions have been made: the scientific space and its subjects are very sensitive to institutional factors that can greatly change the operating conditions of the subjects and the possibility of their inclusion in the scientific space; in the context of growing funding for science, it is necessary to take into account the spatial dynamics and specifics of the scientific potential of Kazakhstan and prevent its degradation in the regions; it is necessary to create a balanced system for assessing the effectiveness of R&D, without giving priority to scientometric and bibliometric indicators, focusing research on the real needs of enterprises.
... In fsQCA analysis, for example, three different factors generate three configurations that align with the searching strategy. In contrast, the regression analysis provides only one set of regression coefficients for this strategy, representing an overall combined impact of the dependent variables (Li and Bathelt, 2018). While the two methods yield partially consistent results, an advantage of fsQCA is that it allows for multiple solutions in terms of configurations that produce the same outcome, referred to as equifinality (Fiss, 2011;. ...
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The digital transformation of firms is a pervasive trend within the digital-based economy. Despite its inevitability, there is a continuing debate regarding the most effective methods for implementing such transformations. This study delineates four digital technology strategies—searching, enhancing, grafting, and integrating—within the theoretical framework that digital technology can strengthen an enterprise’s existing legacy technology. Using fuzzy qualitative comparative analysis, this study examines 76 Chinese high-tech manufacturing companies to uncover the configuration effects of technology distance, the type of technical search, and leadership perceptions on the adoption of these strategies. The empirical results reveal that the searching strategy is commonly employed in scenarios involving general technology, search breadth, and the perceived usefulness of the technology. The enhancing strategy is typically adopted when companies engage in extensive searches and perceive digital technology as easy to use. Moreover, the grafting strategy has emerged as the natural choice when there is a deep search for specific technologies coupled with a recognition of their usefulness. The integrating strategy becomes prominent when a company identifies a specific technology through both search breadth and search depth, acknowledging its usefulness and ease of use simultaneously. These findings offer valuable insights for managers aiming to select an effective digital technology strategy to facilitate successful transformation.
... Here, we seek to complement the existing literature by exploring how multilocational firms obtain different kinds of technological knowledge across US urban areas. In these efforts we follow important new extensions in knowledge sourcing by Li and Bathelt (2018) and Bathelt and Li (2020) who outline the processes through which knowledge-seeking firms extend their geographic footprints, building the nonlocal linkages and networks that leverage technological capabilities found in different communities of actors (see also Cantwell and Iammarino 2005;Maskell, Bathelt, and Malmberg 2006;Phelps and Fuller 2016;Crescenzi and Gagliardi 2018). ...
... The GVC framework allows us to better understand the development and dependency outcomes for a constellation of subnational regional economies that are connected into global production systems through FDI activities by MNEs (Li & Bathelt, 2018;Turkina & Van Assche, 2018). This approach enables consideration of the multiple possible outcomes-both positive and negative-of such intersections (Coe & Yeung, 2019). ...
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Middle-income economies must prioritise human capital development to ensure long-term sustainable growth and economic upgrading. While foreign direct investment (FDI) is believed to aid this endeavour, its impact on technical vocational education and training (TVET) remains understudied. This research explores the influence of FDI by multinational enterprises (MNEs) at various stages of global value chains (GVCs) on TVET graduate numbers in Vietnam and Indonesia from 2006 to 2016. Our findings reveal that greenfield FDI plays a role in shaping TVET supply, with heterogeneous effects across different GVC segments and subnational regions. Specifically, FDI in logistics, sales and marketing, and support and servicing are associated with an increase in the supply of TVET graduates in the region, whereas FDI in headquarters and production may lead to a decline in technical skills. To address these dynamics, public policies should prioritise flexible education systems capable of adapting to MNEs’ evolving skill demands. By doing so, these economies can elevate local human capital levels and avoid the stagnation often associated with middle-income traps. This research underscores the importance of aligning policy with the needs of a rapidly changing global economy to foster sustainable development.
... On the other hand, industry clusters are also advantageous locations for global innovation network linkages (Binz & Truffer, 2017). Bathelt and Li (2014) introduced the concept of global cluster network, subsequently, a series of empirical researches on cross-border global innovation networks between China and Canada have shown that transnational corporations are more inclined to set up subsidiaries in clusters with similar specialties in destination countries (Li & Bathelt, 2018). Especially in terms of knowledge strategies of transnational corporations (Replicating, scouting, connecting, and integrating), and that the two innovation-effective strategies of connecting and integrating are more likely to occur in cluster-to-cluster contexts (Li & Bathelt, 2020). ...
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There are debates about cluster heterogeneity, network structures, and innovations. The difference in the degree to which firms joined in the internal and external networks of heterogeneous clusters can affect innovation performance. There is still a lack of empirical evidence on how networks or spatial factors can differentially affect innovation efficiency due to cluster heterogeneity. China has endogenous clusters formed by small and medium‐sized firms and numerous clusters mainly based on government planning instrument, such as industrial zones and high‐tech parks. There are controversies over these planned cluster, such as insufficient firm connections and weak innovation effectiveness.Cluster innovation is a complex socio‐economic process that combines endogenous context, exogenous factors and interacts with multi‐spatial relationships. This perspective may explain the differences in which heterogeneous clusters improve efficiency. This paper draws on first‐hand data obtained from 188 questionnaires. The Lingang Equipment Manufacturing Cluster in Shanghai and the Taizhou Machine Tool Manufacturing Cluster in Zhejiang serve as examples of heterogeneous clusters. We combine the cluster's endogenous and exogenous characteristics, network size and strength of network ties, and local and non‐local innovation spaces to discuss the impact on innovation efficiency. Expecting to provide a reference for improving the innovation efficiency of heterogeneous clusters in developing economies. The results suggest that regardless of local or non‐local scales, exogenous clusters have a more pronounced effect of local network size and non‐local tie strength on innovation performance based on demand for proximity to customers and suppliers.
... Based on GCN theory, Turkina et al. (2016) portrayed 52 aerospace cluster networks in North America and Europe, using inter-firm buyer-supplier, research, and investment linkages, and found that the reduction in space transaction costs induces clusters to focus on the increasingly sophisticated value chain phase, which leads to the entire network moving from a geo-based localization to a trans-local hierarchy structure. In a recent study, Li and Bathelt (2018) analyzed 3500 investment links within and between countries in Canada and China and found that the "source cluster effect" has a more significant impact on firm location choice than the "source country effect." Lorenzen and Mudambi (2013) emphasized the importance of trans-cluster linkages. ...
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The global cluster networks (GCN) theory has improved the theory concerning industrial clusters. This study attempts to conduct empirical research on the spatial and temporal evolution of China’s automobile industry using GCN. By using cooperative applications for patent data and buyer–supplier data between cluster firms, a 203 × 203 inter-cluster association network was constructed. The main findings are as follows. First, the scale and density of the networks increased from 2000 to 2012. R&D cooperation sub-networks became increasingly localized, forming communities composed of several local clusters. The number of community buyer–supplier sub-networks was relatively stable, while the linkages between communities gradually increased. Second, cluster networks existed at various spatial scales. The spatial scale of the R&D cooperation sub-networks changed from a macro to micro scale, and the buyer–supplier sub-networks expanded to a larger spatial scale. Third, the intra-industry division of labor was an important factor for cluster networks. Among them, vertical division within the industry promoted R&D cooperation sub-networks and buyer–supplier cooperation. The horizontal division only affected buyer–supplier cooperation. Buyer–supplier cooperation significantly affected R&D cooperation. The impact of local specialization on R&D cooperation was not robust.
... A key distinction among corporate portfolios is their size, concerning the number of subsidiaries under the parents' purview (Egelhoff, 1982). This distinction echoes recent work that refers to the number of subsidiaries as alliance portfolio size (Bos et al., 2017), multinational enterprise network size (Asmussen & Fosfuri, 2019), and subsidiary network size (Li & Bathelt, 2018). Importantly, subsidiary portfolio size is related to, but conceptually distinct from, firm size. ...
Article
Research Summary Corporate parents are important to subsidiary performance, but prior strategy research presents mixed results about the extent to which parents drive subsidiary performance differences. Drawing on the corporate strategy literature, we argue that corporate parents’ influence depends on the size of the corporate portfolio that determines subsidiaries’ access to finite corporate resources and the contextual conditions—industrial relatedness and institutional distance—that favor or constrain the applicability of said resources. We find support using a variance decomposition analysis and data on 12,336 subsidiaries of 854 multinational firms. Our study demonstrates that the corporate effect varies according to the structure of the corporate portfolio and the subsidiaries in it. We reconcile theoretical arguments and empirical findings regarding the relative importance of corporate parents to subsidiary performance. Managerial Summary A core objective of corporate managers is understanding those channels most salient to subsidiary performance. The implicit assumption is that the corporate parent matters, but how much so remains unclear, especially since corporate parents cannot contribute equally to all subsidiaries. We demonstrate that the corporate parents of small subsidiary portfolios play a significant role in explaining subsidiary performance differences vis‐à‐vis parents of larger portfolios. We also show how this relative importance increases when subsidiaries exhibit higher industrial relatedness to and institutional distance from the parent. Our findings offer insights into the role of corporate parents in multiunit firms that operate across multiple industries and geographic locations, as well as the need to consider the heterogeneity of corporate influence within and between subsidiary portfolios.
... The factors that are conductive to the establishment of international connections between organizations have been examined by studies of international knowledge linkages and global connectivity (Lorenzen & Mudambi, 2013;Turkina & Van Assche, 2016;Li & Bathelt, 2018). This stream of literature has convincingly shown that international knowledge linkages can be organized in quite different ways, depending on the extent to which the coordination of the interactions is centralized, and on the relative importance of organizations vis a vis individuals in the orchestration of such collaborations (Lorenzen & Mudambi, 2013). ...
Article
We analyze the determinants of firm-based inventors’ collaborations with universities abroad, comparing them with collaborations with national universities. We propose a micro-founded theoretical framework that introduces the role of personal linkages and global organizational pipelines as drivers of international academic collaborations, and we empirically investigate collaborations with national and international universities in a sample of inventors in Italy. We find that in general international collaborations depend positively on inventors working for multinational enterprises (MNEs). Instead for collaborations with national universities, the personal local linkages of the inventors play a large role. However, we also find that for collaborations with very distant universities abroad, such as US ones, working for an MNE is less crucial and the personal linkages of inventors become more important. In this case being an inventor with a network of foreign colleagues and with greater acquaintance with the norms of open science facilitates the interaction. This applies also to inventors who work for MNEs. The results point to a hybrid model of global linkages in the case of collaborations between firms and universities, in which both the personal international linkages of the inventors and the global organizational pipelines of MNEs play an important role.
... However, it is clear from the literature in international business and management that increasing numbers of multinational enterprises (MNEs) have divided their operations, at least in part, to embed themselves within different sites of knowledge production (Ghoshal and Bartlett 1988;Cantwell 1989;Dunning 1998;Chung and Alcácer 2002;Almeida and Phene 2004;Cantwell and Mudambi 2011). These locations are often well-connected global city-regions (Cantwell and Iammarino 2003;Goerzen, Asmussen, and Nielsen 2013;Iammarino and McCann 2013;Castellani et al. 2022) containing relatively dense clusters of innovative economic agents (Berry 2015;Li and Bathelt 2018) with high potentials for knowledge acquisition (Alcácer and Chung 2014;Jindra, Hassan, and Cantner 2016). Of course, access to multiple sources of knowledge is not the only reason for the multi-locational structure of many business organizations. ...
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Research on geographies of knowledge sourcing examines the organizational structure of innovation activities within the firm, the mechanisms by which knowledge is extracted from various external sources and the geography of these different activities. We augment this literature by exploring knowledge sourcing within multi-plant firms operating in Europe. Analysis makes use of linked patent-firm data recording the location of knowledge production and its ownership. The results add value to existing research in three ways. First, the establishments of multi-plant firms are shown to produce different kinds of knowledge in different locations. Second, the patents generated within a firm's establishments are linked to the knowledge stocks of the regions where they operate, supporting a vision of geographical knowledge sourcing. Third, the complexity of knowledge produced within firms is positively related to the number of plants in which they innovate.
... Intangible CSAs include intellectual capital (Dunning, 1998), social networks (Meyer & Peng, 2005), innovation clusters (Li & Bathelt, 2018), stakeholder relationships (London & Hart, 2004), social systems, and institutional systems (Brandl, Darendeli, & Mudambi, 2019). Intangible CSAs help organize society, provide structures for efficient organizing and markets, contribute to value creation, and provide social safety and wellbeing (Markusen, 1996). ...
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All business contributes to environmental crises because of its focus on profit. We argue that international business (IB) contributes more than its fair share. IB's focus on cross-border arbitrage has led to the over-extraction of natural resources and the accumulation of waste. This is a problem, because natural resources are limited in quantity and embedded in their local environment. It is time for IB researchers to step up and substantially and meaningfully address IB’s contribution to environmental crises by embracing the principles of natural systems processes within its core assumptions and improving its theorizing of natural resources. In this paper, we take a step forward in this direction by revisiting and refining the theoretical dimensions of country-specific advantages (CSAs) and firm-specific advantages (FSAs) to recognize natural resources more explicitly. We propose three natural resource-based strategies for multinational enterprises (MNEs): reducing, replacing, and regenerating. This article offers a new theoretical perspective to understand how IB can create value and steward the natural environment, contributing to the sustainability of business, society, and the planet.
... The advantage of management studies lies in a deep understanding of what happens inside the firm, while geographer's work tends to emphasize how the firm's business environment shapes its competitive advantages or disadvantages. Geographers benefit from the research exchange with management studies since the firm-centered approach addresses the concern that many regional development theories lack a solid foundation of microeconomic processes (Li and Bathelt 2018). ...
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The chapter’s purpose is to examine interactions between geographers of socialist countries with IGU and the world geographical community at large in 1945–1990. The authors consider some specific national trends in the development of geography in the former USSR, Poland, and China under the conditions of ideological constraints and geopolitical tensions. A special attention is paid to the forms and impact of internationalization on geography in these countries and the ways of the dissemination of scientific information. The authors show that participation of geographers from their countries in the activities of IGU was of particular importance in the extension of international contacts. It improved the positions of geography in the country and at the same time stimulated the use of new methods and approaches in geographical studies, and allowed spreading of national geographical concepts abroad. A particular role in internationalization belonged to academic leaders. In general, the development of geographical science in socialist countries follows the global paradigm.
... The advantage of management studies lies in a deep understanding of what happens inside the firm, while geographer's work tends to emphasize how the firm's business environment shapes its competitive advantages or disadvantages. Geographers benefit from the research exchange with management studies since the firm-centered approach addresses the concern that many regional development theories lack a solid foundation of microeconomic processes (Li and Bathelt 2018). ...
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Geography has historically enjoyed strong interactions with other disciplines in addressing major challenges related to social, economic, and environmental issues and in contributing overall to sustainability. More especially in the Anthropocene, issues such as climate change, biodiversity loss, terrorism, poverty, refugees, environmental hazards, and pandemics have emerged that require an improved understanding of spatial and temporal patterns, processes, and impacts. Consideration of scale and place-based perspectives are essential in helping to resolve such complex issues. The chapter highlight five arenas of interaction between geography and other disciplines, viz. the natural sciences, socioeconomic sciences, humanities, human-environment relationships, and sustainability science. The International Geographic Union (IGU) provides a platform to unite geographers globally to share ideas, promote communication, and advance the interaction of geography with other disciplines, and also with different stakeholders from NGOs, governmental agencies, and international organizations. At this critical juncture, Geography must continue to develop through its vibrant connections with other fields and geographers should continue to exhibit interdisciplinary leadership by embracing different perspectives, by supporting institutional arrangements that foster interdisciplinary activity, and by seeking the knowledge and techniques that other fields can contribute to geographic perspectives, approaches, and insights to the collective effort. The IGU continues to play an important role in facilitating knowledge development and sharing, and in encouraging transformational actions that promote a just, peaceful, and sustainable planet.
... However, finer-grained specialization of clusters can also increase their vulnerability to external shocks (Barrot & Sauvagnat, 2016). Whether it is a pandemic, a natural disaster or a policy intervention, production disruption in one location can induce a contagion effect to clusters connected in global cluster networks (Li & Bathelt, 2018) or value chains (Miroudot, 2020). For example, during the great recession of 2008-2009, financial crisis in Wall Street (a financial cluster) was channelled through credit interdependence in global value chain to emerging economies (Pietrobelli et al., 2021), influencing export performance of Asian manufacturing clusters. ...
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A central challenge in current cluster policy discussions is how to build innovative clusters that are resilient to external shocks. We examine the Montréal aerospace industry to explore cluster resilience. The case is interesting since it recently experienced two industrial shocks: Boeing 737 MAX crashes in 2018 and 2019 and Bombardier’s sell-off of its flagship CSeries in 2020. Surprisingly, in the wake of the two radical disruptions, the cluster fared quite well in terms of employment and export performance. Using the method of abductive reasoning to find a-matter-of-course explanation of the surprising case, we observe that a low speed of aircraft development and production – a low industry clockspeed – stabilizes local production and knowledge networks through five mechanisms: long-term contracting, R&D cost sharing, production planning, social networking, and technology solidifying. Inspired from the case, we theoretically explore how fast (e. g., fashion and cellphones or the hare) and low (e. g., shipbuilding and aerospace or the tortoise) industry clockspeeds lead to different configurations of firm relations and are thus associated with different types of economic resilience.
... The use of internal mechanisms over market exchanges (Forsgren, 2017), including the movement of managers and inventors (Berry, 2015;Fang et al., 2010), and the more general development of various forms of relationships between the members of an organization (e.g., trust, as discussed by Zucker et al., 1995), facilitate the dissemination of more complex forms of knowledge between operational units. Through these processes, firms might be creating more permanent forms of knowledge 'pipelines' between locations (Bathelt & Li, 2014;Li & Bathelt, 2018). In general, our results show that technological diversification within the plants of multi-locational firms is primarily driven by capabilities residing within the plants themselves. ...
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Where do businesses source the capabilities that influence their diversification? From the resource-based perspective, capabilities are located within the firm. For many economic geographers, capabilities are place-based and flow between firms in local areas. Others claim the capabilities that count emerge from non-local collaboration. The value added of this paper is a firm–establishment–patent dataset that helps identify the sources of capabilities regulating technological diversification in the establishments of multi-locational firms. Results show that capabilities located within establishments themselves are most important to the process of diversification, followed by firm capabilities and then place-based capabilities.
... Multilocational knowledge sourcing strategies are being adopted by an increasing number of organizations, extending the number of locations in which they carry out high value-added activity (Mudambi, 2008;Dunning, 2013;Forsgren, 2017). These locations are target rich in the sense that they tend to be relatively dense clusters of knowledge production (Berry, 2015;Li and Bathelt, 2018) with high potential for agglomeration externalities (Alcacer and Chung, 2014;Jindra et al., 2016). They are often well-connected global city-regions (Goerzen et al. 2013;Iammarino and McCann, 2013;Castellani et al., 2021). ...
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A growing body of research in economic geography, international business management and related fields focuses on geographies of knowledge sourcing. This work examines the organizational structure of innovation activities within the firm, the mechanisms by which knowledge is extracted from various external sources and the geography of these different activities. We augment this literature by exploring knowledge sourcing within multilocational firms operating in the US using a unique dataset matching patent records to firm-level ownership and geographical data. The results add value to existing research in three ways. First, the establishments of multilocational corporations are shown to produce different kinds of knowledge in different locations. Second, the patents generated within a firm's establishments are linked to the knowledge stocks of the cities where they operate, supporting a vision of geographical knowledge sourcing. Third, the complexity of knowledge produced within the firm as a whole is positively related to the number of establishments in which multilocational firms undertake innovation activities. In sum these data suggest that multilocational firms distribute their innovation activities across locations in order to secure access to local pools of tacit knowledge. The complexity value of firms' knowledge production is enhanced as a result of this spatial strategy.
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Despite extensive research on absorptive capacity (ACAP) and its role in firm performance, the impact of geographical proximity and external knowledge flows on ACAP in small and medium-sized enterprises (SMEs) remains underexplored. This study aims to fill that gap by testing and validating how neighboring firms influence a company’s ACAP and its probability of business failure within the context of SMEs. Utilizing the Resource-Based View (RBV) as a theoretical framework, this research explores the "neighbor effect" as a boundary condition that may offset some limitations in SMEs' absorptive capacities. Using data from over 13,000 SMEs in Spain, we employ spatial modeling techniques to reveal external mechanisms that strengthen ACAP. Our findings demonstrate that geographical proximity to knowledge sources, coupled with the integration of external flows, significantly enhances the ACAP of SMEs, which, in turn, positively impacts their performance and reduces the likelihood of business failure. This study also extends existing literature by providing empirical evidence of how proximity and external knowledge flows can influence a firm's success. Contrary to some common assumptions, our results indicate that while proximity is beneficial, it is the integration of external knowledge flows into the ACAP framework that plays a crucial role in achieving competitive advantage. These findings contribute to a deeper understanding of the dynamics between proximity, knowledge flows, and absorptive capacity, providing valuable insights for policymakers and business leaders aiming to foster innovation and resilience in SMEs.
Article
Purpose This study aims to analyse the relationship between a patent’s network position in a knowledge search network and the likelihood and speed of patent transactions. Additionally, it explores whether patent scope moderates these relationships. Design/methodology/approach In this empirical study, the authors collected a sample of patents in the artificial intelligence industry over the period of 1985–2018. Then, the authors examined the direct roles of degree centrality, betweenness centrality and closeness centrality on the likelihood and speed of patent transactions and the moderating role of patent scope in the knowledge search network using the logit and accelerated failure time models. Findings The findings reveal that degree centrality positively affects both the likelihood and speed of patent transactions, while betweenness centrality enhances the likelihood, and closeness centrality significantly boosts both. However, regarding the speed of patent transactions, closeness centrality is the most impactful, followed by degree centrality, with no significant influence of betweenness centrality. Additionally, the patent scope moderates how betweenness centrality affects the likelihood of transactions. Research limitations/implications This study has limitations owing to its exclusive use of data from the Chinese Intellectual Property Office, lack of visibility of the confidential terms of most patent transactions, omission of transaction directionality and focus on a single industry, potentially restricting the breadth and applicability of the findings. In the future, expanding the data set and industries and combining qualitative research methods may be considered to further explore the content of this study. Practical implications This study has practical implications for developing a better understanding of how network structure in the knowledge search network affects the likelihood and speed of patent transactions as well as the identification of high-value patents. These findings suggest future directions for patent holders and policymakers to manage and optimise patent portfolios. Originality/value This study expands the application boundaries of social network theory and the knowledge-based view by conducting an in-depth analysis of how the position characteristics of patents within the knowledge search network influence their potential and speed of transactions in the technology market. Moreover, it provides a theoretical reference for evaluating patent value and identifying high-quality patents by quantifying network positions. Furthermore, the authors construct three centrality measures and explore the development of patent transactions, particularly within the context of the developing country.
Article
Purpose This paper examines the role played by business cluster ecosystems and intellectual capital (IC) in achieving high-growth firm (HGF) status. Design/methodology/approach We draw our insights from the knowledge-based perspective and economic geography as a theoretical lens, which combined offer a more unifying understanding of how business cluster ecosystems and IC foster high growth entrepreneurship. Findings Drawing on a sample of 11,360 German incorporated firms across 80 clusters, we find that cluster ecosystems play a significant role in supporting firms to become HGFs. More specifically, being located in business clusters increases the likelihood of becoming HGFs by 2.2% to 4.49%. We also find that clusters with more productive firms in the ecosystems provide favorable conditions for member firms to achieve HGF status, while the impact of other cluster-specific conditions (high-tech cluster membership and multinational enterprise share in clusters) is less clear. Additional insights suggest that firm IC (investments in intangible assets) enables firms to achieve high growth status. Research limitations/implications The findings of this paper hold theoretical and managerial relevance and shed more light on the impact of cluster-specific factors in the ecosystems and firm IC in achieving high growth entrepreneurship. Originality/value This paper is among the first of its kind to bring together three distinct literatures (HGFs, business clusters and IC) and utilize insights from each to derive a conceptual framework that links them in explaining high-growth entrepreneurship.
Article
Social scientists and policymakers alike have become increasingly concerned with understanding the nature, causes, and consequences of inter-regional inequality in economic living conditions. Contemporary spatial inequality is multi-faceted—it varies depending on how we define inequality, the scale at which it is measured, and which groups in the labor force are considered. Increasing economic inequality has important implications for broader social and political issues. Notably, it is difficult to account for the rise of far-right populism in industrialized countries without considering the context of growing inter-regional inequality. Important explanations for the rise in inter-regional inequality include changing patterns of worker and firm sorting processes across space, major transitions like the reorientation of the economy from manufacturing to digital technologies, and increasing global economic integration, as well as policy. Different causal explanations in turn imply a different role for place-based policy. This article introduces the context of the special issue on the nature, causes, and consequences of inter-regional inequality, focusing specifically on inequality in North America and Western Europe, and aims to identify challenges for, and spark further research on, inter-regional inequality.
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We study firms’ optimal R&D location strategies in a dynamic industry model with competition in product quality. In light of potential future inwards and outwards spillovers firms make their location choices relying on heuristic strategies that are based on the expected present values associated with alternative location patterns. Using a simulation analysis, we show how the strategies of innovators and imitators differ and how they depend on whether firms operate in strongly or weakly innovative industry environments. We also characterize how firms’ location choices should account for the innovativeness of the competitors active in a location.
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The chapter aims to the study of the opportunities of using simulation modeling to describe the system of the knowledge exchange and building within a network of industrial enterprises. Such systems are responsible for the innovative development of companies, ensuring the development of more functional and resource-intensive products. Thus, innovative activity leads to sustainable production and consumption by ensuring high consumer value of goods. Within the framework of this work, the features of building industrial enterprise networks are considered from the point of view of possible strategies for combining companies. Based on the information received, the selection of simulation modeling tools is given. The result of the work is a conceptual hybrid model of the system of knowledge exchange and building within a network of industrial enterprises. The hybrid model being developed combines such paradigms of simulation modeling as system dynamics and agent modeling. Agent modeling tools are used to describe the dynamics of networks of industrial companies formed from independent agents–companies. System dynamics is used to describe the dynamics of knowledge flows and their economic equivalent. The results of the simulation of the agent model determine the coefficients that affect the processes of knowledge building. In turn, the choice of strategies by agents depends on the dynamics of accumulated knowledge and their financial equivalent. This work is an analytical basis for the development of a hybrid simulation model of the system of knowledge exchange and building within a network of industrial enterprises.
Article
Purpose How to improve the resilience of service firms in the crisis, such as the COVID-19 epidemic, to maintain a sustainable competitive advantage becomes a growing concern worldwide. Digital platform capability (DPC) provides a series of opportunities and advantages for service firms to shape resilience in the crisis. This study aims to clarify the effect and mechanism of DPC on service firms’ resilience, and provides a new mediator (strategic learning [SL]), as well as two boundary conditions (legal inefficiency [LIE] and legal incompleteness [LIC]). Design/methodology/approach Questionnaires were used to obtain firm data, and executives answered these key questions. Data from 293 service firms during the COVID-19 period were used for hypothesis testing. Findings DPC was positively related to the adaptive capacity (AC) and planning capacity (PC) of service firms. SL mediated the positive effect of DPC on the AC and PC of service firms. The positive effect between DPC and SL was weakened when LIE and LIC were high. Practical implications This study suggests that it is a very desirable measure to improve DPC to gain organizational resilience (OR) in the crisis. In addition, a SL process in the crisis is crucial, because service firms need to absorb key strategic information from digital platforms to cope with uncertainty. The services firms need to realize that the benefits of DPC will be weakened in the dysfunctional institutional environment of LIE and LIC. Originality/value To the best of the authors’ knowledge, this study is the first to link the DPC with the resilience of service firms, and provides a new explanation mechanism and some boundary conditions for this important relationship. Furthermore, this study takes a step forward, because these efforts respond to the widespread call of the literature on digitalization and OR, and provide new insights for understanding digital resilience.
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The supercluster is a new initiative promoted by the Canadian federal government to strengthen Canada’s most promising clusters and allow innovative firms to operate more productively in sourcing inputs and accessing information, knowledge, and technology. This paper contributes to the scientific research on superclusters and pursues two objectives. First, we discuss the origins of the supercluster initiative and trace its roots back to major research traditions on regional agglomerations and territorial innovation models, in particular the cluster theory, the regional innovation system, and the entrepreneurial ecosystem approaches. Second, we conduct a critical analysis and identify four critical questions (or challenges) that need to be addressed to clarify the scope and objectives of the policy.
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Purpose Cities are host to many of the world’s knowledge intensive research and innovation clusters. As such, they are likely to be attractive locations for emerging market multinational enterprises (MNEs) seeking to engage in knowledge seeking “springboard” type firm-level catch-up strategies. The purpose of this study is to therefore explore whether city-based research-intensive clusters containing deep pools of location bounded (i.e. “sticky”) knowledge are a stronger driver for greenfield research and development (R&D)-related FDI projects for Chinese MNEs than they are for developed market MNEs. Design/methodology/approach The authors use logistic modelling on 97,163 worldwide greenfield FDI projects to explore the relative likelihoods of Chinese MNEs engaging in R&D-related greenfield (i.e. “strategic asset seeking”) FDI projects as well as how city type (global or research-intensive cluster city) moderates this relationship for Chinese MNEs. Findings The authors find that Chinese MNEs are more likely to engage in overseas R&D FDI projects (compared with other types of project) than DMNEs and that research-intensive city clusters hold a stronger attraction for Chinese MNEs than developed market MNEs. Research limitations/implications The authors discuss how the research contributes to the debate on emerging market MNE catch-up theory, as well as that on sub-national city location choice, by highlighting the growing importance of sub-national geography to understanding strategic asset seeking related greenfield FDI. Practical implications Sub-national city location choice is an important driver of strategic asset seeking FDI for Chinese MNEs, one that both national and local city level policymakers should pay attention to. Social implications Chinese FDI via aggressive mergers and acquisitions to acquire key technologies has been restricted in recent years. Policymakers must consider whether they may also wish to restrict Chinese greenfield FDI in R&D-related projects, which now exhibit a pronounced upward trend. Originality/value The authors highlight the growing importance of sub-national geography to understanding strategic asset seeking related greenfield FDI in Chinese MNEs (and how it plays, more generally, a central role in their strategies).
Article
Purpose While conventional views of foreign investment activity primarily relate to efficiency-seeking investments, the authors argue that most other outward foreign direct investments (OFDIs) likely have positive effects on income development in the home region. Data on the US urban system not only illustrates this but also shows that this impact is not equal in all city-regions. The purpose of this paper is to develop an explanation as to why high- and low-income cities are associated with self-reinforcing cycles of OFDI activity that have different home-region impacts. Design/methodology/approach Conventional views assume that inward foreign direct investments (IFDIs) have a positive impact on target regions, while OFDIs are often treated as the flip side of this story, being seen as having negative effects by shifting jobs and income abroad. This paper counters this logic by developing a conceptual argument that systematically distinguishes different types of OFDIs and relates them to economic development effects in the home (investing) region. Findings Using a co-evolutionary conceptualization, this paper suggests that many high-income cities are characterized by a virtuous cycle of development where high, successful OFDI activity generates both positive income effects as well as incentives to engage in further OFDIs in the future, thus leading to additional income increases. In contrast, it is suggested that low-income cities are characterized by what we refer to as vicious cycles of development with low OFDI activity, few development impulses and a lack of incentives and capabilities for future investments. Originality/value This paper develops a counter-perspective to conventional views of OFDI activity, arguing that these investments have a positive impact on regional income levels. The authors develop a spatially sensitive explanation which acknowledges that OFDIs do not trigger a linear process but are associated with diverging inter-urban development paths and may contribute to higher levels of intra-urban inequality. From these findings, the authors derive conclusions for future research and public policy.
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Most institutional studies have conceptualized institutions within the borders of national contexts as relevant to the global orientation of organizations. The world society approach in institutional theory, however, highlights the existence of a global institutional realm (i.e., driven by a process of cultural rationalization) and proposes that as a consequence of both global and national institutional demands, organizations are constructed as actors with global identities-the orientation of an organization toward the world or away from it. We argue that the global identity of organizations varies with the national institutional traditions within which organizations originate, the exposure of organizations to various instantiations of cultural rationalization within national contexts, and the extent to which organizations are governed by traditional forms of authority (i.e., family, nation-state). We tested our hypotheses empirically, using data from 366 corporations listed in major stock indices in 22 countries around the globe. The empirical results support our argument.
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Research Summary The spread of protectionist policies and the COVID‐19 pandemic force policymakers and managers to fundamentally rethink the relationship between location and strategy. We examine this location‐strategy interplay through a structure‐agency perspective by investigating how the economic landscape shapes and, simultaneously, is shaped by firm strategies. Increasing spatial disparity and diversity of innovation and wealth in clusters and city‐regions create both tremendous challenges and opportunities for multinational enterprises to strategically leverage knowledge over space. Locational choices and actions of multinationals, in turn, affect regional economic development paths and geographies of innovation. We argue for deep dialogue and collaboration between economic geography, international business and strategy to untie the knots in the intricate interplay between location and strategy and solve the grand challenges in our turbulent age. Managerial Summary The wide spread of protectionism and the COVID‐19 pandemic have disrupted global value chains unprecedently, forcing policymakers and firm managers to rethink the relationship between business strategies and locations. We suggest that this relationship can be understood in a bilateral way. The concentration of innovation and economic activities in city‐regions and clusters creates big challenges but also tremendous opportunities for multinational enterprises. Multinationals need to direct knowledge across space but also have to deal with local resistance and opposition. The choices and actions of these firms are shaped by and, simultaneously, influence spatial patterns of economic activities. We argue for deep collaboration between economic geographers and international business scholars to solve the grand challenges for business, community and society in our turbulent time.
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The subject of this work is a future development of a post-revenue model that will be based on innovative sales strategies. The industry in focus is global automotive industry. This paper gives an overview of why it is necessary to adopt a new business model and how much it is actually a requirement of the global automotive market itself. The automotive industry is a highly cyclical industry because it depends heavily on the availability of investments at some point, and for this reason, the corporate well-designed sales strategy is the primary tool for maintaining the level of revenues and their growth in the industry, such as automotive. The industry is highly turbulent and has faced severe changes in the recent decade where clients expect more service-oriented approach by major manufacturer as well as by other stakeholders involved in the automotive value chain. Thus, stakeholders have to innovate constantly to keep clients satisfied. In this respect, in our paper we highlight the most important aspects to be considered by business counterparts relevant to the automotive industry companies in order to build future sustainable business operations. We present the factors that need to be examined, especially in the context of emerging markets in Europe and provide directions for future research.
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Both industrial agglomeration and inward foreign direct investment (IFDI) are drivers of China’s economic development. However, their distributions are unbalanced. Both are large in eastern regions, similar to the distribution of the GDP in China. It indicates there may be a relationship between them. Based on it, the paper selects fixed effects model to analyse the relationships among GDP, IFDI and the industrial agglomeration in China regarding different regions and time horizons, and finds that on the whole, the industrial agglomeration and IFDI do promote the regional economic growth stably during different periods, while both are much stronger in the western regions and central regions. The paper also finds the coefficient of their interaction item is significantly negative, which implies the transmission mechanism between IFDI and industry agglomeration is inefficient. To promote the balanced economy development of different regions, the paper suggests that China should improve the quantity and quality of industrial agglomeration and the IFDI to increase the coordinated development of both in different regions.
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Knowledge generation is often viewed as a direct outcome of spatial proximity or other social affinities between firms. In rejecting structural interpretations, this article emphasizes the crucial role of agency in orchestrating knowledge transfer and generation over space. We explore how firms strategically leverage the uneven geography of knowledge in international investments and identify four spatial knowledge strategies according to the direction of knowledge flows and mode of connection: knowledge replicating, scouting, connecting, and integrating. Drawing from a relational perspective, we develop four propositions to investigate how these strategies are configured in specific spatial settings. It is argued that replicating and scouting strategies occur from clusters to nonclusters and from nonclusters to clusters, respectively, while connecting and integrating strategies take place in cluster-to-cluster contexts. Adopting fuzzy set Qualitative Comparative Analysis (fsQCA), an investigation of forty-nine headquarters-subsidiary linkages between Canada and China substantiates the four knowledge strategies and their spatial configurations, and shows how spatial structure and agency are fundamentally intertwined and influence each other.
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We show how the initial subnational entry location of foreign multinational enterprises (MNEs) in China influences their subsequent within-country location choices and expansion speed. We distinguish between MNEs that establish their first subsidiary in co-ethnic cores – dense agglomerations of other firms from the same country of origin – and MNEs that locate their first subsidiary in the periphery, i.e., outside of these co-ethnic cores. To identify co-ethnic cores in China, we employ a geo-visualization methodology, which draws the boundaries of cores organically and dynamically over time. We contrast our findings with the prevailing approach of using static administrative boundaries for identifying agglomerations. Our results provide evidence of path dependency, in that (a) entry through subnational locations with strong co-ethnic communities is followed by expansion into other locations where co-ethnic communities are present, and that (b) entry through co-ethnic communities accelerates the pace at which MNEs establish additional subsidiaries in China. We also find that co-ethnic community effects continue to influence within-country MNE activities over time, despite a host of economic, institutional, and investment developments. Journal of International Business Studies (2017): http://link.springer.com/article/10.1057/s41267-016-0060-x/fulltext.html
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Spurred by the classic work of Dunning, MNE location has become the focus of a growing body of research in the field. In this paper we argue that international business (IB) research examining the spatial dimension has serious weaknesses, stemming from its traditional assumption of the country as the location unit of analysis. While border-crossing remains the key research context of IB, placing it within a general spatial framework that recognizes both international and subnational spatial heterogeneity opens up vastnew vistas for research. Analyzing MNEs as border-crossing multi-location enterprises allows the researcher to distinguish between (discrete) border effects and (continuous) distance effects and undertake a more fine-grained analysis of location. Within such analysis national borders may appear as qualitative discontinuities in space, that is, points at which spatial heterogeneity changes abruptly. However, subnational spatial heterogeneity is often the characteristic that drives firm strategy as MNEs decide to locate in parfiicular agglomerations and not at random locations within a country. The complex firms that lB scholars study typically include multiple units within the same country, so that a complete analysis requires considering both subnational distance effects as well as international border effects.
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Analyzing the comprehensive 35-year patent data set associated with the Detroit auto cluster we confirm that innovation in clusters can increase in spite of a long-term decline in manufacturing activity. The “stickiness” of local knowledge is sustained by: (i) increasing technological specialization at the local level and (ii) growing connectedness to global centers of excellence. The very forces that bring about the decline in manufacturing in a cluster sustain their position as a global center of innovative excellence.
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Research and development (R&D) internationalization is on the rise for advanced economy multinationals (AMNEs) as well as emerging economy multinationals (EMNEs). We study EMNE R&D internationalization by comparing it to that by AMNEs in the context of an emerging, knowledge-intensive industry. We find that these two are fundamentally different processes. While the internationalization of AMNEs’ R&D activities can largely be explained in terms of the twin strategies of competence exploitation and competence creation, EMNE R&D internationalization is rooted in the firms’ overall catch up strategy to get on par with industry leaders. An in-depth comparison of knowledge flows reveals that within AMNEs, headquarters often serves the primary source of knowledge for R&D subsidiaries. In contrast, within EMNEs, headquarters accesses knowledge from R&D subsidiaries in advanced economies for innovation catch-up. Within this dichotomy, the innovative capabilities of EMNE headquarters develop more slowly and with greater difficulty than those of AMNE subsidiaries.
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Clusters are geographic concentrations of industries related by knowledge, skills, inputs, demand and/or other linkages. There is an increasing need for cluster-based data to support research, facilitate comparisons of clusters across regions and support policymakers in defining regional strategies. This article develops a novel clustering algorithm that systematically generates and assesses sets of cluster definitions (i.e., groups of closely related industries). We implement the algorithm using 2009 data for U.S. industries (six-digit NAICS), and propose a new set of benchmark cluster definitions that incorporates measures of inter-industry linkages based on co-location patterns, input–output links, and similarities in labor occupations. We also illustrate the algorithm’s ability to compare alternative sets of cluster definitions by evaluating our new set against existing sets in the literature. We find that our proposed set outperforms other methods in capturing a wide range of inter-industry linkages, including the grouping of industries within the same three-digit NAICS.
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We explore how openness in terms of external linkages generates learning effects, which enable firms to generate more innovation outputs from any given breadth of external linkages. Openness to external knowledge sources, whether through search activity or linkages to external partners in new product development, involves a process of interaction and information processing. Such activities are likely to be subject to a learning process, as firms learn which knowledge sources and collaborative linkages are most useful to their particular needs, and which partnerships are most effective in delivering innovation performance. Using panel data from Irish manufacturing plants, we find evidence of such learning effects: establishments with substantial experience of external collaborations in previous periods derive more innovation output from openness in the current period. © 2013 The Authors. Strategic Management Journal published by John Wiley & Sons Ltd.
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The 1980 patent granted to Stanley Cohen and Herbert Boyer for their development of rDNA technology played a critical role in the establishment of the modern biotechnology industry. From the birth of this general purpose technology in the San Francisco Bay area, rDNA-related knowledge diffused across sectors and regions of the U.S. economy. We use patent data to track the geography and the timing of rDNA technology adoption in U.S. metropolitan areas. Using event history and fixed effects conditional logit models, we show how the diffusion of rDNA techniques was influenced by cognitive, geographical and social proximity.
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We explore the impact of geographically bounded, intra-firm linkages (internal agglomerations) and geographically bounded, inter-firm linkages (external agglomerations) on firms’ location strategies. Using data from the Census Bureau’s Longitudinal Business Database, we analyze the locations of new establishments of biopharmaceutical firms in the U.S. in 1993–2005. We consider all activities in the value chain and allow location choices to vary by R&D, manufacturing, and sales. Our findings suggest that internal agglomerations have a positive impact on location. The effects of internal agglomerations vary by activity, and they arise both within an activity (e.g. among plants) and across activities (e.g. between sales and manufacturing). Our results also suggest that previous estimates of the effect of external agglomerations may be overestimated because the existing literature abstracted from internal agglomerations.
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Spurred by the classic work of Dunning, MNE location has become the focus of a growing body of research in the field. In this paper we argue that international business (IB) research examining the spatial dimension has serious weaknesses, stemming from its traditional assumption of the country as the location unit of analysis. While border-crossing remains the key research context of IB, placing it within a general spatial framework that recognizes both international and subnational spatial heterogeneity opens up vast new vistas for research. Analyzing MNEs as border-crossing multi-location enterprises allows the researcher to distinguish between (discrete) border effects and (continuous) distance effects and undertake a more fine-grained analysis of location. Within such analysis national borders may appear as qualitative discontinuities in space, that is, points at which spatial heterogeneity changes abruptly. However, subnational spatial heterogeneity is often the characteristic that drives firm strategy as MNEs decide to locate in particular agglomerations and not at random locations within a country. The complex firms that IB scholars study typically include multiple units within the same country, so that a complete analysis requires considering both subnational distance effects as well as international border effects.
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Researchers in international strategy are increasingly investigating the role of regional clusters as features of international industry, most concerned with the competitive role of clusters and the competitive interactions among cluster firms. We look instead at knowledge sharing between firms through the medium of untraded interdependencies - knowledge exchanged informally and without explicit compensation. We specifically address knowledge development at the firm and the cluster level and examine the role of knowledge stocks and flows in establishing competitive advantage for clusters and firms.
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In this article, we make two important contributions to the literature on clusters. First, we provide a broader theory of cluster connectivity that has hitherto focused on organization-based pipelines and MNE subsidiaries, by including linkages in the form of personal relationships. Second, we use the lens of social network theory to derive a number of testable propositions. We propose that global linkages with decentralized network structures have the highest potential for local spillovers. In the emerging economy context, our theory implies that clusters linked to the global economy by decentralized pipelines have potential for in-depth catch-up, focused in industry and technology scope. In contrast, clusters linked through decentralized personal relationships have potential for in-breadth catch-up over a range of related industries and technologies. We illustrate our theoretical propositions by contrasting two emerging economy case studies: Bollywood, the Indian filmed entertainment cluster in Mumbai and the Indian software cluster in Bangalore.
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The literature on location choices has mostly emphasized the impact of location and firm characteristics. However, most industries with a significant presence of multi-location firms are oligopolistic in nature, which suggests that strategic interaction among firms plays an important role in firms’ decision-making processes. This paper explores how strategic interaction among competitors affects firms’ geographic expansion across time and markets. Specifically, we build a model in which two firms that differ in their capabilities enter sequentially into two markets with different potentials for profit. The model is solved using game theory under three learning scenarios that capture the ability of a firm to transfer its capabilities across markets: no learning, local learning, and global learning. Three equilibrium strategies arise: accommodate, marginalize, and collocate. We identify how these strategies emerge depending on the tradeoff between the opportunity costs of absence (giving competitors a lead in a market) and the entrenchment benefits (the cost advantage firms develop through learning-by-doing when they enter early). Both the opportunity costs of absence and the entrenchment benefits vary according to initial relative firm capabilities, relative market profitability, and learning rates. Our model offers a comprehensive approach to understanding the drivers of firm location choices by modeling not only the impact of location and firm heterogeneity, but also the strategic interaction among firms.
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Despite the diffusion of communication tools and boundary spanning technologies, knowledge flows in innovation processes retain a distinct localized nature in many industries, and geographical clusters emerge as critical areas to foster technological diffusion. In this article, we focus on the knowledge mediating role, as technological “gatekeepers,” of focal firms in industrial districts. Based on a longitudinal dataset of 720 patents granted by the United States Patent and Trademark Office (USPTO) between 1990 and 2003 to firms in the automatic packaging machinery industrial district in Northern Italy, and controlling for the uneven geographical distribution of patenting activities, we show that: (i) firms within the district use local knowledge to a greater extent and more rapidly than knowledge from outside the district, (ii) focal firms use external knowledge to a greater extent than other firms operating in the district, and (iii) other (nonfocal) firms within the district rely on knowledge generated by focal firms to a greater extent than would be expected, given the geographic distribution of innovative activity in the industry. Implications for research on innovation in localized economic systems and firm-level strategic differentiation are discussed.
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We contend that two important, nonrelational, features of formal interorganizational networks-geographic propinquity and organizational form-fundamentally alter the flow of information through a network. Within regional economies, contractual linkages among physically proximate organizations represent relatively transparent channels for information transfer because they are embedded in an ecology rich in informal and labor market transmission mechanisms. Similarly, we argue that the spillovers that result from proprietary alliances are a function of the institutional commitments and practices of members of the network. When the dominant nodes in an innovation network are committed to open regimes of information disclosure, the entire structure is characterized by less tightly monitored ties. The relative accessibility of knowledge transferred through contractual linkages to organizations determines whether innovation benefits accrue broadly to membership in a coherent network component or narrowly to centrality. We draw on novel network visualization methods and conditional fixed effects negative binomial regressions to test these arguments for human therapeutic biotechnology firms located in the Boston metropolitan area.
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We examine the importance of country-of-origin effects and of universal contingencies such as industrial recipes in organizational practices at the international level of multinational enterprises. This is based on a study comparing European (Finnish, French, German, Dutch, Swiss, Swedish, British), American and Japanese multinational enterprises. Although multinationals are highly internationalized by definition, our study shows their organizational control practices at the international level to be more than anything else explained by their country of origin. Universal contingencies such as size and industry, on the other hand, are more related to internationalization strategy. Internationalization strategy and organizational control are associated with different sets of variables; to this extent they appear more decoupled with regard to each other than the literature suggests. Multinationals appear to follow tracks of coordination and control in which they have become embedded in their country of origin. Nationally specific institutions and culture have to be interpreted as particularistic but universally practicable facilitators of internationally competing organizational practices.
Article
http://deepblue.lib.umich.edu/bitstream/2027.42/110592/1/smj2214.pdf
Chapter
This article first traces the changing world economic scenario for international business over the past two decades, and then goes on to examine its implications for the location of foreign direct investment and multinational enterprise activity. It suggests that many of the explanations of the 1970s and early 1980s need to be modified as firm-specific assets have become mobile across natural boundaries. A final section of the article examines the dynamic interface between the value-added activities of multinational enterprises in different locations.
Chapter
The essence of modern economic growth is the increase in the stock of useful knowledge and the extension of its application. Since the origins of technical and social innovations have never been confined to the borders of any one nation, the economic growth of all countries depends to some degree on the successful application of a transnational stock of knowledge (Kuznets, 1966). In other words, the economic growth of every nation is inextricably linked to the successful international transfer of technology. Nevertheless, economists have been remarkably slow in addressing themselves to the economics of international technology transfer. The result is that “at both the analytic and factual level very little is known about the international transfer of knowhow” (Reynolds, 1966). © 2003 by World Scientific Publishing Co. Pte. Ltd. All rights reserved.
Chapter
The underlying theme of this book is the impact of the increasing globalization of economic activity, and the advent of the knowledge‐based economy, on the spatial distribution of economic activity, both between countries and within countries. More especially, it seeks to reconcile the paradox of ‘slippery space’, as demonstrated by the growing transnationalization of the production of goods and services, and that of ‘sticky places’ as shown by the increasing tendency for certain kinds of economic activity—and particularly knowledge‐intensive activities—to be concentrated, or clustered, in limited spatial areas. These twin forces, both of which have been separately identified and extensively analysed in the literature, may be considered as opposite sides of the same spatial coin. In this book, they are viewed from the lenses of several scholarly disciplines, each of which is advancing understanding of one of the most significant trends of our day and age. The book is divided into four main parts. Part One first identifies the key analytical issues to be examined later, and then presents geographical, economic, and business perspectives of these. Part Two looks at the role of macroregions as units of spatial analysis. Part Three contains eight country studies. Part Four examines in more detail some of the policy implications of the subject matter dealt with in earlier chapters. The book is aimed at scholars and graduate students in the fields of business, economics, geography, and political science.
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The innovation-driven multinational enterprise (MNE) has dominated international business (IB) research for several decades now. Beginning with the award-winning research of Dunning, there have been calls for IB researchers to rediscover the importance of locations. Recent work has emphasized that firms and locations co-evolve with one another, as knowledge is transferred and leveraged across space. Integrating insights from IB and economic geography, we propose a research agenda for IB scholarship on spatially dispersed yet connected innovation processes. This agenda is premised on the current reality of global value chains in which mobile (MNEs, people) and immobile (locations) factors interact. The research perspective suggested recognizes that locations are host to increasingly "fine-sliced" activities, whose nature and composition are continuously changed by MNE-driven innovation processes. As today's specialized activities become tomorrow's standardized ones, the shifting distribution of global value creation depends on the pattern of international knowledge connectivity.
Article
Research summary: We study the processes through which multinational corporations ( MNCs ) identify and make use of external sources of knowledge. Based on a seven‐year longitudinal study of one MNC 's overseas scouting unit, we show how a simple one‐directional “channelling” process gradually gave way to three higher value‐added processes, labelled “translating,” “matchmaking,” and “transforming.” Building on these insights, we develop an integrative framework, defining the conditions under which each of the four processes is likely to transpire, and showing how the stock of social capital held by the scouting unit allows it to perform increasingly high value‐added activities over time. Implications for the MNC , external knowledge sourcing, and boundary‐spanning literatures are discussed . Managerial summary: Over the years, many multinational corporations ( MNC s) have created overseas “scouting” units to tap into new ideas and opportunities in leading‐edge markets, but with mixed outcomes. In this study, we describe the development of a European telecom firm's scouting unit in Silicon Valley during the 2000s, focusing on the specific approaches used by the scouting managers to build effective connections between Silicon Valley start‐ups and the firm's business units back in Europe. We identify four distinct approaches for different types of opportunities, and we observe a clear sequencing of effort over time as the scouting managers built the necessary capabilities and credibility . Copyright © 2015 John Wiley & Sons, Ltd.
Article
This article first traces the changing world economic scenario for international business over the past two decades, and then goes on to examine its implications for the location of foreign direct investment and multinational enterprise activity. It suggests that many of the explanations of the 1970s and early 1980s need to be modified as firm-specific assets have become mobile across natural boundaries. A final section of the article examines the dynamic interface between the value-added activities of multinational national enterprises in different locations.
Article
Pursuing a nodal (i.e., subsidiary) level of analysis, this paper advances and tests art overarching theoretical framework pertaining to intracorporate knowledge transfers within multinational corporations (MNCs). We predicted that (i) knowledge outflows from a subsidiary would be positively associated with value of the subsidiary's knowledge stock, its motivational disposition to share knowledge, and the richness of transmission channels; and (ii) knowledge inflows into a subsidiary would be positively associated with richness of transmission channels, motivational disposition to acquire knowledge, and the capacity to absorb the incoming knowledge. These predictions were tested empirically with data from 374 subsidiaries within 75 MNCs headquartered in the U.S., Europe, and Japan. Except for our predictions regarding the impact of source unit's motivational disposition on knowledge outflows, the data provide either full or partial support to an of the other elements of our theoretical framework. Copyright (C) 2000 John Wiley & Sons, Ltd.
Article
We began this project with three research questions: What competitive advantages do EMNEs leverage as they internationalize, and how are those advantages shaped by the home-country context? How do EMNEs internationalize, and why? And, how is the rise of EMNEs affecting global industry dynamics? Underlying those questions was the theoretical question of whether existing IB frameworks are adequate to explain EMNE behavior, and if not, how they should be modified or extended. The studies in Part II show clearly that EMNEs are not a homogeneous group by any means. The countries from which they hail, the industries in which they operate, the competitive advantages they exploit, the markets they target, and the internationalization paths they follow vary quite widely. The evidence does not permit sweeping generalizations about EMNEs nor about how they are different from MNEs that came before, because the latter is also a heterogeneous group. Equally important, EMNEs have internationalized in a different international context than MNEs that came before, including even Japanese and Korean MNEs, and this makes inter-temporal comparisons even more difficult. Since the 1990s, the international policy environment and the technological environment have changed profoundly. Domestic and foreign markets were more open in this period than in earlier decades, following the collapse of Communism, the conclusion of the Uruguay Round trade deal, and the creation of the WTO.
Article
This article provides an overview of the key insights resulting from recent international business research on the interactions between location advantages and the competitiveness of multinational enterprises (MNEs). It consists of four main sections. First, the evolution of the location advantage concept in the international economics literature is discussed. Here, it appears that the international economics literature has substantially broadened its analytical scope in the last few decades. However, the field of international business research had gone even further in its analysis of the interactions between location and MNE competitiveness because of its in-depth focus on the actual behaviour of MNEs. The complex nature of location advantages for MNEs is discussed in more detail in the second section. The third section describes the intellectual foundations of a spatial analysis of MNE activities. Finally, the fourth section discusses the relative contribution of home country specific advantages (CSAs) and host CSAs to MNE competitiveness.
Article
This article outlines a model of regional cluster development in which the clusters and foreign multinational enterprises (MNEs) are interdependent. Such clusters are characterized by a strong or dominant presence of foreign MNEs as well as a strong contribution by cluster-based subsidiaries to the overall strategy of the MNEs. The case of the Hong Kongfinancial-services cluster is used to demonstrate that interdependent clusters provide types of investment opportunities, particularly for “marketplace-seeking” and “information-seeking” investments, and benefits to foreign multinationals that go beyond those usually contemplated in the MNE literature, while the locations housing such clusters receive benefits that also go beyond those usually contemplated. The article concludes with implications for economic policy, firm strategy, and further research on the interaction between clusters and MNEs.
Article
Research summary : This paper advances strategic management research by taking a close look at the reasons, procedures, and results of cluster identification methods, focusing on a density‐based algorithm that organically define clusters from actual locations of economic activities. Despite being a popular research topic and analytical tool, geographic clusters are often studied with little consideration given to the underlying economic activities, the unique cluster boundaries, or the appropriate benchmark of economic concentration. Our goal is to increase awareness of the complexities behind cluster identification, and to provide concrete insights and methodologies applicable to various empirical settings. The method we propose is especially useful when researchers work in global settings, where data available at different geographic units complicates comparisons across countries. Managerial summary : Geographic proximity has been recognized as a fundamental factor driving firm performance, especially in knowledge‐intensive industries. However, despite increasing interest in the study of geographic clusters—locations with a high concentration of economic activity—we as researchers have not given sufficient consideration to the underlying economic activity, the unique cluster boundaries, or even the definition of economic concentration. In this paper, we carefully examined the existing methodologies for cluster identification and proposed a method that defines clusters based on the actual location of economic activity. This new method is applicable to various empirical settings beyond geographic clusters. In addition, because clusters are defined by actual economic activity rather than administrative boundaries, it allows for meaningful comparison across countries. Copyright © 2015 John Wiley & Sons, Ltd.
Article
This article argues that local knowledge building and global (nonlocal) knowledge-accessing practices in economic development are intrinsically interwoven. They generate fundamental feedback loops, which are channeled through and lead to ongoing knowledge circulation. To better understand the nature of the specific mechanisms and conditions underlying these processes, three key areas of research are identified for current and future research. These are related to (i) creative agents and the nature of local creative processes, (ii) community formation and local creativity from ideas to market penetration and (iii) temporary gatherings as translocal knowledge platforms.
Article
In the globalizing knowledge economy firms have become less reliant on local production and market networks and increasingly expand their reach to an international or global scale. The argument of this paper suggests that this has given rise to distinct geographies of knowledge transfers over distance, which rely on periodic or regular temporary face-to-face contacts. While some of these settings of temporary knowledge transfers have existed for a long time, they are now being intensively applied throughout the economy. In this paper we develop a typology of these geographies based on three dimensions that characterize the conditions for knowledge exchange: (i) framing, (ii) cognitive focus and goals, and (iii) trust and risks involved. Based on these variables, we identify three configurations and eight subcategories of knowledge transfers that build upon temporary face-to-face interaction, classified as (1) international community gatherings, (2) international business travel, and (3) transnational network relations. Systematic comparison reveals that with growing uncertainty in economic interaction and with increasing commitment between the agents, trust-based linkages tend to become more important, and the number of interacting agents declines, while the frequency of temporary face-to-face meetings increases.
Article
Using a network perspective of multinational firms, this article develops conceptions of global cluster networks and global city-region networks that are based on foreign direct investment (FDI) activities. The article first formulates a global cluster-network hypothesis suggesting that multinational cluster firms are more likely to set up new foreign affiliates in other, similarly specialized clusters to keep up with global industry dynamics. Conversely, it is suggested that non-cluster firms are more likely to avoid cluster destinations in their FDIs. Second, it is hypothesized that cluster networks generate connections between city-regions in different countries that are horizontal and vertical in character and thus shape global city-region networks. To test these hypotheses, the spatial patterns of 299 FDI cases from Canada to China between 2006 and 2010 are investigated, generally supporting the hypotheses developed. © The Author (2013). Published by Oxford University Press. All rights reserved.
Article
This paper explores the globalization of R&D by Japanese industry, examining the scope and nature of Japanese R&D in the United States, the globalization strategies of Japanese firms, and the determinants of the location of offshore R&D facilities. A comprehensive dataset on Japanese R&D in the United States was developed, and field research and survey research were conducted with Japanese firms and R&D laboratories. The findings indicate that Japanese corporations operated 174 stand-alone R&D laboratories in the United States and spent more than $1 billion on U.S.-based R&D in 1990. Japanese R&D investment in the United States is geographically concentrated around leading technology centers and in the Midwest transplant automotive corridor. A large share of Japanese R&D facilities are product development facilities that customize products for the U.S. market and provide technical support to manufacturing. A subset of these facilities, particularly in the automotive sector, is located at or near existing transplant factories. A smaller number of Japanese R&D investments are scientifically oriented basic research facilities, located near major U.S. research centers to secure access to new sources of scientific and technical talent. The findings thus suggest that the globalization of R&D by Japanese corporations is the result of: (1) the globalization of innovation and production, (2) the emergence of new centers of technological innovation and knowledge-intensive production, and (3) the increasing importance of interaction between the sites of innovation and production.
Article
Using an original dataset of 4,183 former J-1 Visa holders from 81 countries—all of whom had worked in the U.S.—I examine how skilled return migrants, as cross-border brokers, transfer knowledge about organizational practices from abroad to their home countries. I hypothesize that returnees’ knowledge transfer success depends on their embeddedness in both their home- and host-country workplaces and develop and test theory about the organizational and cultural conditions that activate or suppress skilled returnees’ ability to broker knowledge across borders. Findings show that not only do host- and home-country embeddedness increase knowledge transfer success, but they also interact positively. At the organizational level, however, the presence of other returnees in a home-country workplace decreases the positive effect of a returnee’s host-country embeddedness, whereas the similarity of a returnee’s industry background to the home-country industry increases it. At the country level, high xenophobia in a given home country diminishes the positive effect of host-country embeddedness but increases the positive effect of home-country embeddedness. These findings inform an interpersonal perspective on knowledge transfer, contributing to work on brokerage, organizational learning, employee mobility, and the globalization of expert knowledge.
Book
With the publication of his best-selling books "Competitive Strategy (1980) and "Competitive Advantage (1985), Michael E. Porter of the Harvard Business School established himself as the world's leading authority on competitive advantage. Now, at a time when economic performance rather than military might will be the index of national strength, Porter builds on the seminal ideas of his earlier works to explore what makes a nation's firms and industries competitive in global markets and propels a whole nation's economy. In so doing, he presents a brilliant new paradigm which, in addition to its practical applications, may well supplant the 200-year-old concept of "comparative advantage" in economic analysis of international competitiveness. To write this important new work, Porter and his associates conducted in-country research in ten leading nations, closely studying the patterns of industry success as well as the company strategies and national policies that achieved it. The nations are Britain, Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, and the United States. The three leading industrial powers are included, as well as other nations intentionally varied in size, government policy toward industry, social philosophy, and geography. Porter's research identifies the fundamental determinants of national competitive advantage in an industry, and how they work together as a system. He explains the important phenomenon of "clustering," in which related groups of successful firms and industries emerge in one nation to gain leading positions in the world market. Among the over 100 industries examined are the German chemical and printing industries, Swisstextile equipment and pharmaceuticals, Swedish mining equipment and truck manufacturing, Italian fabric and home appliances, and American computer software and movies. Building on his theory of national advantage in industries and clusters, Porter identifies the stages of competitive development through which entire national economies advance and decline. Porter's finding are rich in implications for both firms and governments. He describes how a company can tap and extend its nation's advantages in international competition. He provides a blueprint for government policy to enhance national competitive advantage and also outlines the agendas in the years ahead for the nations studied. This is a work which will become the standard for all further discussions of global competition and the sources of the new wealth of nations.
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This study reexamines the relationships between corporate diversification strategies and firm performance and suggests that these relationships are related to home country environments. We examined two environmental aspects: factors that facilitate transformational activities and institutions that foster transactional activities. Using a sample of firms from six Western European countries, we found support for the study's central proposition, that home country environment is an important component in the study of corporate diversification strategies.
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Since the 1990s, the Chinese apparel industry in Prato has developed from a few stitching workshops into full-fledged production networks. However, persistent disparity between the Chinese and Italian labor has triggered widespread social tensions. Drawing upon the recent literature of critical labor studies, this paper offers a different perspective to see the disparity in terms of the multiplication of labor across scales. The Chinese labor in Prato is made cheap and flexible by the proliferation of institutional and social borders, which were in turn inadvertently produced by Italian immigration policies, Chinese social norms, and local and regional economic conditions. In particular, the Chinese migrant workers have played an active role in producing social borders and in their own exploitation. Therefore, the labor polarization in Prato can hardly be solved by local institutional arrangements, and Italian trade unions have failed to organize the Chinese migrant labor in Prato.
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Work on clusters during the last few decades convincingly demonstrates enhanced opportunities for local growth and entrepreneurship, but external upstream knowledge linkages are often overlooked or taken for granted. This article is an attempt to remedy this situation by investigating why and how young, single-site firms search for distant sources of complementary competences. The discussion is positioned within a comprehensive framework that allows a systematic investigation of the approaches available to firms engaged in globally extended learning. By utilizing the distinction between problem awareness (what remote knowledge is needed?) and source awareness (where does this knowledge reside?) the article explores the relative merits and inherent limitations of pipelines, listening posts, crowdsourcing and trade fairs to acquire knowledge and solutions from geographically and relationally remote sources.
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Introduction 1. Surprising Success 2. Learning the Silicon Valley System 3. Creating Cross-Regional Communities 4. Taiwan as Silicon Sibling 5. Taiwan as Partner and Parent 6. Manufacturing in Mainland China 7. IT Enclaves in India 8. The Argonaut Advantage Appendix A: Immigrant Professional and Networking Associations, Silicon Valley Appendix B: Survey Results: Immigrant Professionals in Silicon Valley Notes References Abbreviations Acknowledgments Index
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This study rests upon the premise that differences in the productivity performance of multinational enterprises (MNEs) stem from variations in their ability to access and combine globally distributed knowledge reservoirs within one organization. Its contribution lies in demonstrating that this important source of variation is determined by (a) the idiosyncratic manner in which the MNE's network of subsidiaries is structured. (b) the international breadth and depth of this network and (c) its location choices in the global landscape. We find that when multinationals spread their operations across many geographical markets, they benefit from knowledge externalities more than when they concentrate their activities in few countries. We further show that the ability to exploit spatially distant knowledge depends not only on idiosyncrasies specific to the MNE, but also on exogenous forces associated with international variations in appropriability regimes and industry-specific technological opportunities. As our study considers how the subsidiaries of the MNE collectively influence the productivity of the entire group, it captures complementarities and synergies within the group, and deepens understanding of how MNE-specific and location bound factors jointly shape performance outcomes.