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Location strategy in cluster networks
Abstract
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.
... 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). ...
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). ...
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. ...
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.
... The influence of the fourth industrial revolution on global production networks has been also only recently analysed by researchers including the prestigious EU funded H2020 project MAKERS 1 which covers the general aspects of global value chains (GVC) and industrial districts ID (including clusters) or papers devoted exclusively to mutual relations between I4.0 and clusters . Against this background, the scholarly work linking clusters with internationalisation -the most advanced form of that, i.e. foreign direct investment (FDI) -is relatively well established (Li and Bathelt, 2018;Jankowska, et al ., 2017;Jankowska and Götz, 2017;Pavelkova, et al ., 2016;Ffowcs-Williams, 2012;Belussi, 2018). ...
... Broadly understood knowledge as a source of a cluster's attractiveness for FDIs had been distinguished due to the growing role of technology-driven FDIs , and an intangible character of this production input including the issue of tacit, sticky, uncodified knowledge (Malmberg and Maskell, 1999;Dunning, 2000;Krugman, 1991;Li and Bathelt, 2018). Theories such as asset-augmenting (exploiting) or knowledge-seeking FDI stipulate the MNEs' interests in gaining access to foreign knowledge sources, whereas Marshall's approach, concepts of regional learning, learning region, or GREMI framework suggest that a cluster may be an environment conducive for knowledge processes. ...
... Based on the second-hand data and extant literature one may, however, attempt to specify the channels of influence. It can be speculated that a cluster's diagnosed importance for nurturing the conducive knowledge environment of I4.0 -the centre of competence and the ecosystem of technology transfer -translates into improved innovativeness and hence the competitiveness of cluster inhabitants increasing their specific advantages and thus influencing their propensity of engaging in foreign activities and investing abroad (Zucchella and Siano, 2014;Li and Bathelt, 2018;Mudambi et al ., 2018). ...
The novelty of Industry 4.0 (I4.0) as a research topic means that the literature covering the interrelations between digital business transformation and categories such as internationalisation, foreign direct investment (FDI), or clusters is scant. This paper shows that clusters may contribute to the advancement of I4.0 while at the same time they stimulate the internationalisation of indigenous firms and the inflow of foreign investors. Based on conceptual deliberations it develops a research agenda for exploring how clusters might affect OFDI and IFDI by facilitating the I4.0. It can advance our understanding on the spatial aspects of the ongoing business digital transformation.
... Ter Wal, 2013). Finally, MNE strategy is also considered in some cases, as bridging with the IB literature (see Hervas-Oliver and Boix-Domenech-Domènech, 2013;Cainelli, Di Maria and Ganau, 2014;Mariotti, Piscitello and Elia, 2014;Li and Bathelt, 2018). ...
... Overall, the influence of EG issues in the IB research agenda is minor and less active, with some exceptions (e.g. Li and Bathelt, 2018;Bathelt and Li, 2014;Hervas-Oliver and Boix-Domenech, 2013). Similarly, the study of MNE subsidiaries, their strategies and interactions with clusters is under-researched in the EG literature. ...
... Bathelt, Mudambi or Birkinshaw) producing cross-fertilized studies (e.g. Mudambi et al., 2018;Bathelt, Cantwell and Mudambi, 2018;Li and Bathelt, 2018), that are building momentum for a more integrated and substantial joint conversation. ...
Purpose
For the specific topic of multinationals in clusters, both regional strands and international business and management literatures address the topic from different yet intertwined perspectives. This study aims to facilitate the integration of the conversations and the distinct literatures to produce a clear understanding and conceptualization of the existent knowledge on the topic, with the aim to foster an integration of those different lines of inquiry on the topic that can advance scholarly research and improve policymaking.
Design/methodology/approach
Mixing a robust and longitudinal bibliometric analysis (1992-2018) and a qualitative critical review, the study disentangles sub-conversations on the topic in each literature.
Findings
The study encounters commonalities that foster cross-fertilization and blind spots that prevent integration of findings from each literature.
Research limitations/implications
Both literatures need to cross-fertilize and integrate each other’s knowledge.
Originality/value
To the best of the authors’ knowledge, this study is the first to integrate literatures using bibliometrics, mapping the existing knowledge on two key areas of competitiveness: clusters and multinationals.
... By way of contrast, although the recently expanded IB network literature has long been grounded in the Uppsala business network approach, newer research has come to use the terminology of embeddedness in a network, often to refer more specifically to a geographically local context (e.g., Asakawa et al., 2018;Cantwell & Iammarino, 2003). This is a natural extension in the conceptualization of how we think about an IB network, since it follows the equivalent usage of the terminology of local embeddedness in the field of economic geography, especially when referencing the role of clusters (e.g., Li & Bathelt, 2018). For IB scholars, the existence of local clusters has given rise to discussions of whether foreign-owned MNC subsidiaries may be able to benefit from local knowledge spillovers when located in a cluster, or indeed how they might contribute to a local business network in which they become embedded (Cantwell, 2009). ...
... Indeed, the management of knowledge diversity across local metropolitan networks may in itself help to explain the ability of MNCs to benefit from greater geographic scope (Scalera, Perri, & Hannigan, 2018). More specifically, firms are better able to connect geographically distant clusters where the local and international networks have some related characteristics which facilitate new valuecreating opportunities through the cross-fertilization of networks (Choudhury, Geraghty, & Khanna, 2012;Li & Bathelt, 2018;Turkina & Van Assche, 2018). ...
... International business network structures and embeddedness E.g., Cantwell (1989), Hedlund (1994), Nohria and Ghoshal (1997), Cantwell and Iammarino (2003), Chini (2004), Monteiro et al. (2008), Cantwell (2009), Johanson and Vahlne (2009), Cantwell and Mudambi (2011, Asakawa et al. (2018), Awate and Mudambi (2018) and Li and Bathelt (2018) Connectivity across firms and places E.g., Rosenkopf and Almeida (2003), Belderbos and Zou (2007), Derudder et al. (2007), Vasudeva et al. (2013), Cano-Kollmann et al. (2016, Zhang and Pezeshkan (2016), Bathelt et al. (2018) and Stallkamp et al. (2018) Local-global interactions and the spread of knowledge hubs E.g., Hymer (1972), Cantwell (2005), Kali and Reyes (2007), Glückler (2011), Choudhury et al. (2012), Goerzen et al. (2013), Kim (2013), Lüthi et al. (2015), Cantwell and Zaman (2018), Harmancioglu and Tellis (2018), Li and Bathelt (2018), Scalera et al. (2018), Turkina and Van Assche (2018) and Useche et al. (2020) units within an MNC R&D department (Tortoriello, Reagans, & McEvily, 2012); within the same company, the results showed that bridging across intraorganizational boundaries with a Simmelian tie (i.e., a tie between two people who are both connected to a third person) was particularly generative of innovation (Tortoriello & Krackhardt, 2010). These kinds of strong, bridging ties, require considerable emotional energy and commitment, and require further research attention within the IB research program. ...
Insights from social network research have generated significant advancements in disciplines such as sociology, economics, and psychology. In comparison, the incorporation of social network ideas into international business (IB) research remains more limited. The purpose of this special issue is to foster further research on social networks in IB. In our introductory essay, we provide a brief overview of network research in the IB domain to give a sense of some of the major ongoing themes and to illustrate how the social network approach can provide fresh insights and add substantive value to the field. To emphasize the considerable potential of using social network theories and ideas to advance research and understanding in IB, we also indicate some future directions. We follow these with a summary of the five articles in the special issue.
... Regarding the determinants of OFDI most evidence usually focuses only on one end, either the destination or origin of the investment (P. Li & Bathelt, 2018). ...
... Namely, it has been recently shown that the influence of the 'cluster-of-origin' is far more important than that of the 'country-of-origin' in explaining firms' investment location choices (e.g. Li & Bathelt, 2018;Turkina & Van Assche, 2018), and that localised regional and cluster networks affect the shape of global urban networks (Bathelt & Li, 2014). Despite the recognition that integrating firms' organisational issues with the characteristics of the subnational regions is crucial for the understanding of MNEs and their spatial environment (Beugelsdijk et al., 2010), the literature on the geography of internationalisation at the regional sub-national level has mainly dealt with international trade (e.g. ...
... The argument can be taken forward by considering the level of local competition à la Porter (1990), whereupon firms originating in highly competitive local settings within industrial clusters are more likely to pursue asset/knowledge-seeking internationalisation strategies than firms in other settings (P. Li & Bathelt, 2018). ...
Economies around the globe are increasingly interconnected. Foreign Direct Investment (FDI) has become one of the main drivers of economic interdependence among regions across the world. FDI as a flow of capital across international boundaries is bound to have distinctive effects on the human capital accumulation process in both home and host economies, with important consequences for economic development. The aim of this thesis is to improve our understanding on the geography of two interrelated economic phenomena for Mexican subnational regions: FDI and Human Capital. Mexico has been an important recipient of inward FDI, but in the last two decades the services sector has been gaining importance over manufacturing, while the country has been increasingly sending flows of outward FDI to the rest of the world. Concurrently, wage inequalities persist, educational outcomes are lagging behind, and demand for skilled workers is decreasing. These changing trends and shifting balance have important implications for wages and the incentives to develop human capital at the local and regional scale in Mexico. Moreover, the aforementioned changes in FDI patterns, wages and human capital have occurred in a country where territorial disparities are still commonplace. Against this background, these papers explore several relationships between FDI and three dimensions of human capital accumulation, namely; wages, educational attainment, and skills. The first paper examines the effect of inward FDI on the wage gap between skilled and unskilled workers. Departing from these findings, the second paper analyses the effect of higher wages offered by multinationals on youth educational choices. The third paper explores the regional determinants of the recent internationalisation of Mexican firms, with particular attention to skills, productivity and innovation. Finally, the fourth paper explores the effects of outward FDI on the relative demand for skilled and unskilled workers. In order to empirically investigate the aforementioned relationships, I deploy a wide array of econometric techniques that allow me to provide quantitative estimates of the associations at hand. Particular attention is placed on endogeneity concerns that may lead to statistical biases on the evidence provided. By adopting a regional- and industry-level perspective, the present thesis hopes to shed some light on the effects of bidirectional FDI on various Human Capital dimensions. Policy implications drawn from the findings herein, are of paramount importance. Mexico has taken significant strides towards development; however, it still has a sizeable untapped economic potential. This and other empirical evidence should be duly considered if Mexico is to escape the middle-income trap.
... 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. ...
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.
... While some regions may not have firms that are capable of managing such risks at the global level, these regions' firms may be able to establish domestic linkages that develop within a more homogenous national institutional context where it is easier to create trust (Trippl et al., 2009). Potential gains through extended domestic market access may still be substantial while the potential to access fundamentally new knowledge and market segments may be limited (Li & Bathelt, 2018). In addition to the international and domestic level, networks at the local level are also of importance to trigger collective action and catalyze regional development potential. ...
... This enabled us to construct comprehensive subsidiary networks and calculate a series of network indicators at the local, national and international levels that capture different channels through which economic growth impulses are transmitted and created. In our model, we used the following variables: 1) Scale is the number of firms in the LexisNexis database located within a CBSA, included to capture potential agglomeration and scale effects that promote knowledge creation and productivity increases; 2) Local Connectivity represents the subsidiary linkages that exist within a CBSA; 3) National Connectivity measures how many other U.S. CBSAs a particular CBSA is connected to through firms' domestic linkages; and 4) International Connectivity captures how many international linkages to foreign-country capitals, global 5 Similar relational understandings of global connectivity have been used across numerous fields of research, including work on world cities, global cluster networks and international trade (Taylor & Derudder, 2004;Li & Bathelt, 2018;Venables, 2020). 6 To measure the role of local connectivity more comprehensively would, of course, require going beyond local subsidiary networks and include a wider range of collaborations at this scale Ferrary & Granovetter, 2017). ...
Considering stagnating regional prosperity levels and growing inter-regional disparities in many economies, this paper appeals for a renewed research agenda to deepen our understanding of regional economic development. This is done by discussing different conceptual perspectives, their empirical applications and open questions and suggestions for future research. Conventional approaches view development as an outcome of and dependent upon local economic structure. That is, high regional performance is associated with specific regional industrial and human capital mixes. We argue that to deepen our understanding of the mechanisms that drive regional economic development it is helpful to apply a relational approach that pays attention to the networks between economic actors across different spatial scales, from local to global. These generate knowledge as well as access to technologies, resources and markets, thereby catalyzing income growth. To support regional policy agendas, it is further necessary to go beyond identifying regularities that structure development and engage with differing regional pathways by conducting systematic comparative analyses of local contextual and institutional conditions.
... The second stream of research examines the consequences of subnational institutional differences on firms, especially foreign investors. A growing number of empirical studies show significant variation in foreign firm performance associated with heterogeneous subnational conditions, in both formal (Li & Bathelt, 2018;Meyer & Nguyen, 2005) and informal institutional domains (Gao et al., 2018). This association is particularly evident in an emerging market context (Chan, Makino, & Isobe, 2010;Lu et al., 2018). ...
... This association is particularly evident in an emerging market context (Chan, Makino, & Isobe, 2010;Lu et al., 2018). Apart from firm performance, subnational institutions are also shown to affect foreign firms' strategic decisions such as location choice (Gao et al., 2018;Li & Bathelt, 2018), entry mode (Meyer & Nguyen, 2005), and localization of outsourcing partnerships (Santangelo, Meyer, & Jindra, 2016). ...
As a social and economic phenomenon, corruption has attracted much scholarly attention in the field of international business. However, studies concerning corruption generally remain at the national level, overlooking heterogeneity in institutions at the subnational level. This study zooms in on subnational corruption to examine its influence on the performance outcome of foreign firms, as well as the mitigation strategies by foreign firms through building mutual dependence with local governments. Analyzing data on foreign firms operating in China between 2011 and 2013, we find that subnational corruption level is negatively associated with the financial performance of foreign firms. This negative association is weakened by foreign firms’ export ratio and local experience.
... 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). ...
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. ...
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). ...
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). ...
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). ...
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. ...
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. ...
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). ...
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.
... The literature on knowledge connectivity has emphasized the different types of linkages that lead firms can use to tap into foreign knowledge pockets (Lorenzen & Mudambi, 2013). They can build organization-based pipelines by setting up foreign subsidiaries or formal inter-firm linkages (Li & Bathelt, 2018;Turkina & Van Assche, 2018). They can also build individual-based linkages through global mobility of inventors and experts. ...
Global value chains (GVCs) have revolutionized production processes and many companies no longer produce goods and services entirely in one single country or within their own organizational boundaries. Through offshoring and outsourcing, value chains are sliced up and activities are dispersed to locations and actors where they can be produced or executed most efficiently. The fine slicing of GVCs also implies that innovation activities can be geographically dispersed and separated from other GVC activities. However, there have been inconsistent arguments on the impact of this dispersion on innovations and on the effect of innovations on GVC activities, as research on the topic has been sporadic, inconclusive, and fragmented. Thus, this paper conceptually discusses the nature of innovation in GVCs by reviewing literature and raises important questions that should be addressed. It also outlines a variety of possible research directions and future research foci that can and should be taken to develop the field.
... Despite recent economic geography contributions emphasizing the influence of the 'cluster-of-origin' over that of the 'countryof-origin' in explaining MNC investment location choices (e.g. Bathelt and Li, 2014;Li and Bathelt, 2017), the vast literature on agglomeration economies and spillover mechanisms has downplayed the role of connectivity through, especially outward, FDI in the dynamics of regional specialisation and comparative advantages. Recent academic work in the context of smart specialisation strategies emphasises the crucial link between regional internationalisation and innovation upgrading (Uyarra et al., 2014;Radosevic and Stancova, 2018;Barzotto and De Propris, 2018). ...
This article explores the role of subnational geography in the analysis of the consequences of Outward Foreign Direct Investment (OFDI) for workers performing different typologies of jobs. We qualify jobs according to their knowledge content, degree of tradability and response to agglomeration economies. While the former two dimensions are key to signal the intensity to OFDI exposure of different typologies of jobs, the latter contributes to explain the unequal spatial distribution of benefits and losses from OFDI in terms of job creation/destruction. We theorise areas that are more severely exposed to OFDI experience job losses in routine occupations, whereas they do not necessarily benefit from job creation in non-routine jobs. To test our hypothesis, we make use of a balanced panel dataset at the local labour market level, exploiting variations in OFDI exposure and in the job composition of local areas. Our findings—robust to numerous checks, including unobserved global and local trends—indicate that job losses concentrate in regions that were more exposed to OFDI based on their initial industry mix, and affect individuals performing mainly routine tasks. In these same areas, however, no significant effects are found when looking at job creation in non-routine occupations.
... However, it can be argued that this interaction may be difficult to measure if we look at how MNEs shape globalization from the GVC standpoint. We know that MNEs are the drivers of GVCs and consequently knowledge transfer (Li & Bathelt, 2018). What we do not know is the mechanism in which GVCs quantitatively drive globalization through knowledge transfer (Bems & Kikkawa, 2020). ...
This is a theoretical essay piece originally submitted as a term paper requirement for an MSc Course at HEC Montreal.
... MNEs also prefer to locate R&D and design activities in global cities, as shown, for example, by Castellani and Lavoratori (2017). At the cluster level, Li and Bathelt (2018) find that knowledge-intensive firms are more likely to locate in clusters, both at home and abroad. Thus, MNEs leverage local knowledge pools by strategically locating affiliates across clusters. ...
We explore the public policy implications of two new, significant, and inter-related global phenomena. First, the rising share of services, particularly innovation-driven digital and knowledge-based services, in foreign trade and multinational enterprise activity; and second, the increasingly important role of global cities as home and hosts to these activities. Our framework distinguishes between national economic policies to promote trade and FDI, referred to as economic diplomacy, and comparable policies originating in cities, referred to as city diplomacy. National economic diplomacy has traditionally promoted trade and investment in goods, often through trade agreements and promotion agencies, and we explore the limitations of these tools as trade in services becomes more important. However, we also note that trade in services, particularly innovation-driven services, is concentrated in global cities, and traded between them, often within MNEs. We conclude that national policies on trade and investment cannot be divorced from innovation and knowledge strategies, and that these strategies cannot be divorced from cities. We emphasize that national economic diplomacy should be better aligned with city diplomacy. We also discuss how the transition to stronger city diplomacy may have consequences for firms and their strategies for corporate diplomacy.
... From a geographical perspective, clusters generate more specialized knowledge in their main industries than in other non-specialized areas, particularly tacit knowledge [63], and it is efficiently spread locally [64]. Furthermore, the mobility of human capital between firms fosters knowledge sharing within the cluster [65]. ...
Research into entrepreneurship has gradually changed its perspective over recent decades, becoming a very relevant research topic. In the last few years, various lines of research have been developed to find new explanatory factors of entrepreneurial propensity in specific socioeconomic and institutional contexts, among which we can highlight local territorial agglomerations. The main objective of the study is to offer new knowledge about the factors that influence the entrepreneurial capacity of food and beverage clusters using different secondary sources. To reach this objective, we analyze how the degree of agglomeration, institutional thickness, and knowledge affects new companies created in the last five years within the 37 food and beverage clusters in Spain. Multiple regression results show that company agglomeration and the presence of supporting institutions positively influence entrepreneurial capacity in these clusters. However, available knowledge has a negative influence on entrepreneurial capacity in these specialized environments.
... Even though the importance of geographical proximity for knowledge flows has been questioned (Tallman and Phene, 2007), Li and Bathelt (2018) present empirical evidence of MNEs strategically targeting these local technology clusters for R&D FDI. Krenz and Gehringer (2015) argue that the intensity of R&D activities in these clusters motivates the decisions of MNEs to settle in these specific locations, for instance in the border area with Germany in Poland. ...
Purpose
This paper addresses the geographical dimension of cross-border knowledge integration, expressed as the co-invention of patent filings and investigates the siting of patenting activities by major US corporations in China. Most importantly, the study looks into the patterns of international co-invention or the links of these locations to headquarters and other company subsidiaries.
Design/methodology/approach
The study explores the cases of six US multinationals that file international patent applications in China. The applications were analyzed based on the composition of invention teams and the locations of inventors.
Findings
The co-invented patent filings by US multinational enterprises (MNEs) in China demonstrate a high degree of US–Chinese subsidiary collaboration. Links with other subsidiaries are marginal, and at the same time, high levels of sole patenting by inventors in China point to competence-creating research and development (R&D) activities taking place.
Practical implications
The lack of subsidiary-subsidiary collaboration, especially subsidiaries in other emerging markets, indicates a less diversified strategy of leveraging internal networks of knowledge. This also implies that Chinese subsidiaries still lack attractiveness as partners in subsidiary-subsidiary co-invention. Only two companies in our sample, Procter & Gamble and Intel, demonstrate a highly diversified, integrated and transnational pattern of innovation management.
Originality/value
The paper contributes to the contextual understanding of the rich landscape of R&D activities of major US MNEs in China. By exploring these cases, the paper identifies a number of trends. First, the R&D activities in this sample are highly concentrated in technological clusters located in Beijing and Shanghai. Technological clustering is an important advantage of the innovation landscape in emerging markets. Second, the paper underscores the importance of differentiating between different types of co-invention. The patent applications in this sample tend to unite inventors mostly from the US and China, and so multi-country applications involving subsidiaries in other countries are rare. Thus, the level of integration outside the center-host bandwidth is low. However, Chinese subsidiaries demonstrate high levels of autonomy by filing single-country applications, which implies that they are building their own research identity.
... City-regions that host technology clusters are found in both emerging and advanced economies (Li and Bathelt, 2018). Hence, MNEs search internationally for knowledge supplements and may even challenge the dominance of R&D activities carried out in their home country (Mudambi and Navarra, 2004), where R&D has traditionally been co-located with MNE headquarters. ...
Much of the rising international connectedness of city-regions has developed from MNEs replacing local connections with (superior) international ones. This often creates local disconnectedness that energizes the current populist backlash against MNE activities. We develop approaches to new IB theory, addressing the interdependencies of MNEs and city-regions that we propose as a crucial avenue for future research. We contrast two generic MNE strategies. The first is the traditional one: the ‘global orchestration’ of resources and markets. We argue that it exacerbates local disconnectedness. The second, that we call ‘local spawning,’ involves engaging with the local entrepreneurial eco-system to create and renew local connectedness, diffusing populist responses. Some MNEs are better able to implement a local spawning strategy, due to industry factors like innovation clock-speed, and firm characteristics like organizational path dependency. Finally, we distinguish between disconnection, which is an outcome of MNE strategy, and global disruptions, like the coronavirus (COVID-19) pandemic, which are primarily stochastic events. Addressing disconnections requires MNEs to re-orient their strategies while dealing with disruptions requires undertaking risk mitigation. We present empirical evidence from city-regions around the world to illustrate our theory.
... A new appreciation of the value of manufacturing activities in light of the current geopolitical turmoil in terms of jobs and inclusive growth, as well as the emergence of new technologies with all their implications (The Economist, 2009), are creating a new continuum linking local places with global spaces. Understanding emerging de-globalisation forces matters since changes in technological paradigms and in the nature of markets can significantly impact on firms' location decisions in relation to manufacturing activities (Mudambi et al., 2018;Li and Bathelt, 2018;Chidlow et al., 2015;Chidolow et al., 2009). More specifically, such location decisions can relate to the adaptation of a reshoring strategy, which involves bringing back the manufacturing activity (or part of it) from a foreign market to a home market. ...
... This chapter aims to review the recent debate on de-globalisation and to present some preliminary evidence that reconsiders the value of a manufacturing activity in light of the current geopolitical turmoil and new technological availabilities (The Economist, 2009). This is somehow important as changes in the nature of markets and technology can significantly impact on firms' location decisions in relation to manufacturing activities (Chidlow et al., 2009;Chidlow et al., 2015;Li and Bathelt, 2018;Mudambi et al., 2018). More specifically, such location decisions can relate to the adaptation of a reshoring strategy, which involves bringing manufacturing production (or part of it) back from abroad. ...
You can the open access book here https://www.taylorfrancis.com/books/e/9780429057984
... In this study, we define multiple co-located clusters as those economic entities that are part of the same organizational field of related industries and technologies (DiMaggio & Powell, 1983), located in the same city-region or regional context and characterized by a combination of within-and between-cluster labor market, production, and research linkages (Malmberg & Maskell, 2002). Despite their relative geographical proximity, linkage patterns within and between these clusters can take a different form (Li & Bathelt, 2018). If strong interactions develop between them, the clusters should not be viewed as atomistic entities, but as interdependent clusters that co-exist in relation to one another (Parr, 2002;Phelps, 2004). ...
The Beijing economy has an unusual industrial configuration consisting of multiple industry parks in the biomedical industry with a cluster‐like structure, specifically Yizhuang Park, Daxing Park, and ZLS (Zhongguancun Life Science) Park. If these industry parks can indeed be conceptualized as clusters, a number of questions arise regarding their collaborative or competitive relationships that can potentially be both beneficial and detrimental. We begin analyzing this case of three biomedical industry clusters by conceptualizing four ideal‐type scenarios of co‐located cluster configurations and identifying their within‐cluster and between‐cluster linkage patterns. Based on a relational research design, we develop a simple testing procedure that allows us to identify the specific empirical cluster configuration at hand. Based on a survey of labor market, government event, research, and production linkages of 164 firms in the three biomedical industry parks, we conduct statistical tests and conclude that Beijing represents a case of three collaborating clusters, with some elements of integration.
... In general, sustainable regional policies should by no means be simplified as putting together local economic entities specialized in similar sectors in spatially defined industrial districts through top-down administrative manoeuvres. Rather, they should develop multi-layer orchestration mechanisms that encourage economic entities to "work together" in an open network configuration that channels different "local buzz" through "global pipelines" (Bathelt et al., 2004;Mariotti et al., 2010;Li & Bathelt, 2017). The core-periphery features of the network underline where local competition takes place and the niches for new business opportunity creation (Lipparini, Lorenzoni, & Ferriani, 2014). ...
This exploratory study uncovers how the economic complexity of local production and global connectivity contribute to a subnational region's competitiveness and sustainable development. Addressing the knowledge generation and exchange processes orchestrated by global value chains, we demonstrate that the composition of a subnational region's product space network does not necessarily replicate the same configuration of the country‐level network. By applying social network analysis (SNA) techniques, we analyze the structural features of Quebec's product space network and compare the complexity indices of the province's advantageous sectors with those of Canada. Finally, we conclude with policy insights for sustainable development and suggest future research directions.
Cette recherche exploratoire découvre comment la complexité économique de la production locale et de la connectivité globale contribuent à la compétitivité régionale au niveau sous‐national ainsi qu'au développement durable. En adressant les processus de génération et d'échange de connaissances, qui sont orchestrés par les chaînes de valeur mondiales, nous démontrons que la composition du réseau d'espace produit d'une région sous‐nationale ne réplique pas nécessairement la même configuration que celui du niveau national. En appliquant les techniques de l'analyse des réseaux sociaux (ARS), nous analysons les caractéristiques structurelles du réseau d'espace produit du Québec et comparons les indices de complexité des secteurs avantageux de la province avec ceux du Canada. Enfin, nous concluons avec des aperçus sur les politiques au sujet du développement durable et proposons des directions de recherche à venir.
... Indeed, when MNEs avoid co-location in highly specialized areas, they also limit their own access to local knowledge and other agglomeration economies, such as supply networks and qualified workforce. Thus, MNEs managers need to design and implement devices that, on the one hand prevent local leakages of their knowledge then, while previous literature used to consider agglomeration effects generally beneficial, at least until offset by congestion effects and pecuniary diseconomies (e.g., Richardson, 1995;Rosenthal & Strange, 2004), several studies in different fields (international business, global strategy, regional science and economic geography) have increasingly emphasized the ambivalent role of agglomeration in relation to the firm-level attributes and differential abilities to access and generate knowledge (e.g., Alcácer & Chung, 2007;Alcácer, Dezso, & Zhao, 2013;Li & Bathelt, 2018;Mariotti, Piscitello, & Elia, 2010;McCann & Folta, 2011;Rigby & Brown, 2015). ...
Research summary
Our study provides a quasi–replication of Shaver and Flyer (2000), which was among the first studies that challenged the positive role of agglomeration in determining companies' location choice and performances, thus changing the way management scholars view companies' attitude towards agglomeration forces. We employ the same research design, specification and tests, and a different population, to discuss the generalizability of the original study. Building on the framework of Shaver and Flyer (2000), our findings offer intriguing new empirical evidence highlighting the importance of the differential between entering foreign firms and host country firms as a crucial condition in understanding agglomeration forces and adverse selection mechanisms.
Managerial summary
Our exercise confirms that agglomeration forces act differently on stronger versus weaker multinational enterprises (MNEs). However, we find that stronger MNEs tend to avoid location in highly specialized areas when they are afraid of knowledge leakages towards host country–based rivals that have enough absorptive capacity to benefit and improve their competitive advantages. Managerial implications are quite relevant. Indeed, when MNEs avoid co–location in highly specialized areas, they also limit their own access to local knowledge and other agglomeration economies, such as supply networks and qualified workforce. Thus, MNEs managers need to design and implement devices that, on the one hand prevent local leakages of their knowledge and, on the other, do not hinder their access to local unique knowledge and resources.
... It has been recently shown that the influence of the 'cluster-of-origin' is far more important than that of the 'country-of-origin' in explaining firms' investment location choices (e.g. Li & Bathelt, 2017;Turkina & Van Assche, 2018), and that localised regional and cluster networks affect the shape of global urban networks (Bathelt & Li, 2014). ...
The transformations in the worldwide division of labour brought about by globalisation and technological change have shown an unintended negative effect, particularly evident in advanced economic systems: uneven spatial distribution of wealth and rising within-country inequality. Although the latter has featured prominently in recent academic and policy debates, in this paper we argue that the relevance of connectivity (here proxied by foreign capital investments, FDI) for regional economic development is still underestimated and suffers from a nation-biased perspective. As a consequence, the relationship between the spatial inequality spurred by the global division of labour and the changes in the structural advantages of regions remains to be fully understood in its implications for economic growth, territorial resilience and industrial policy. Furthermore, even though connectivity entails bi-directional links – i.e. with regions being simultaneously receivers and senders – attractiveness to foreign capital has long been at the centre of policy attention whilst internationalisation through investment abroad has been disregarded, and sometimes purposely ignored, in regional development policy agendas. We use three broad-brushed European case studies to discuss some guiding principles for a place-sensitive regional policy eager to integrate the connectivity dimension in pursuing local economic development and territorial equity.
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.
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.
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 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.
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).
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.
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.
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.
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.
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.
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.
We examine how institutional factors influence the strategies entrepreneurial ventures use as they seek the knowledge they need to perform and compete. With a focus on economic and ecosystem development, we propose a framework of interrelations between two principal knowledge-search strategies, their interactions with varying levels of institutional development, and the joint effects on venture performance. We utilize a sample of 1,470 entrepreneurial ventures to examine two hypotheses. Results, based on hierarchical regression, distributed lag analyses, and several assumption and robustness checks show that knowledge-search strategy interrelations are complementary when institutional development is high but substitutive when institutional development is low. We execute a post hoc analysis using separate data sources to replicate these results and strengthen our findings. Finally, we discuss implications for entrepreneurial practitioners, policymakers, and scholars.
After a century of inter-regional income convergence, average incomes have been diverging between U.S. cities since the 1980s, calling for new policy agendas. We argue that policy research should move beyond its current focus on the effects of inter-city divergence from technological change, migration, and trade, to include the effect of outward foreign-direct investments (OFDIs). This paper suggests that OFDIs have contributed to income divergence across U.S. cities. We argue that OFDIs can positively contribute to average income levels in investing (home) cities through labor, knowledge, multiplier and trade effects – a relationship that has not been systematically investigated in prior research. It is suggested that regional income levels and OFDIs are subject to a virtuous co-evolutionary process for high-income cities while having weaker effects for lower-income cities. This is tested with a combination of fixed-effects panel regressions and quantile regressions, before and after the 2008/2009 financial crisis. Our key finding is that, while OFDIs have a positive effect on regional income levels in the post-crisis period, their effect is largest for cities with incomes around the 60th to 80th percentiles of the income distribution. This suggests that the benefits of OFDIs primarily accrue to already successful city-regions, allowing them to further their pre-existing lead.
This paper examines the dynamics of the location patterns of the foreign direct investment(FDI)subsidiaries in manufacturing and service sectors across regions in a developing economy before and after the accession of the European Union in 2004. The data at the NUTS level 2 on regions in Poland is analyzed employing the revealed location advantage (RLA) index for industrial specialization (RLAis) of the regions. The study tests the concentration patterns of industrial sectors along with the industrial specialization level of regions’ participating foreign enterprises across all regions of Poland. The findings allow answering for the presented hypothesis testing the level of industrial specialization across regions and its impact on narrowing industrial specialization, wages and the level of R&D investment. The results determine that the location of foreign firms in service-related industries is concentrating mostly in the largest agglomerations with the presence of large markets and universities. While, also, several regions seem to be able to narrow their manufacturing specializations, they generally locate at, or near, the legacy centers of those industrial sectors. This provides answers for, and confirms the raised hypothesis and generally follows the existing theoretical path of the developed economies. The study, also, shows that Polish regions attracting a higher number of foreign service-related investments also seem to increase their industrial specialization in select manufacturing sectors that can increasingly attract R&D investment.
Two classic perspectives of knowledge generation across space can be distinguished: one that focuses on localized knowledge networks in communities or clusters and another that investigates how innovation is linked to global knowledge networks of multinational enterprises. The former view has been prevalent in economic geography, the latter in international business. By integrating both perspectives, this paper focuses on the processes of how firms extend their knowledge networks from local to global settings. It develops a four-stage model of building cross-border knowledge pipelines, involving site selection, cross-border knowledge facilitation, local embedding, and cross-border knowledge generation. The model emphasizes the significant role of knowledge facilitators in building cross-border knowledge pipelines and is substantiated in a typical case study of Canadian firms in China.
This paper examines the dynamics of the location patterns of the foreign direct investment(FDI)subsidiaries in manufacturing and service sectors across regions in a developing economy before and after the accession of the European Union in 2004. The data at the NUTS level 2 on regions in Poland is analyzed employing the revealed location advantage (RLA) index for industrial specialization (RLAis) of the regions. The study tests the concentration patterns of industrial sectors along with the industrial specialization level of regions’ participating foreign enterprises across all regions of Poland. The findings allow answering for the presented hypothesis testing the level of industrial specialization across regions and its impact on narrowing industrial specialization, wages and the level of R&D investment. The results determine that the location of foreign firms in service-related industries is concentrating mostly in the largest agglomerations with the presence of large markets and universities. While, also, several regions seem to be able to narrow their manufacturing specializations, they generally locate at, or near, the legacy centers of those industrial sectors. This provides answers for, and confirms the raised hypothesis and generally follows the existing theoretical path of the developed economies. The study, also, shows that Polish regions attracting a higher number of foreign service-related investments also seem to increase their industrial specialization in select manufacturing sectors that can increasingly attract R&D investment.
Challenging populist views of outward foreign direct investments (OFDIs) that suggest they move prosperity abroad, this article builds a model suggesting that OFDIs support urban-regional income levels due to (1) labor; (2) knowledge; and (3) multiplier, spillover, and intermediate input effects. In a panel study of median incomes in US urban regions between 2005 and 2013, we first establish a base model that measures income as a function of local factor endowments (high skill levels, fast-growing and technologically sophisticated industries, and urban scale effects). This base model is highly significant. In the next step, we extend this model by adding our main variables of greenfield inward and outward investment intensity, and finally we integrate other indicators that measure the geographic, industrial, and functional composition of OFDIs. While the results for other investment-related indicators are mixed, the main investment variables are highly significant, thus providing strong support that greenfield OFDIs act as a catalyst of urban-regional income development.
Research Summary
This article examines how multinational enterprises (MNEs) leverage knowledge across clusters. Based on the geographical sources and the contextuality of knowledge, we construct a typology of four MNE knowledge strategies across space: replicating, scouting, connecting, and integrating, and take into consideration their spatial, industrial, and leadership contexts. A fuzzy‐set qualitative comparative analysis of 49 pairs of headquarters‐subsidiary linkages between Canada and China suggests that replicating strategies occur in cluster‐to‐non‐cluster contexts or in fields with a knowledge gap between the two countries, whereas scouting strategies are typical in non‐cluster‐to‐cluster investments. Connecting and integrating strategies are focused on cluster‐to‐cluster contexts. We also find that while connecting occurs in fields where knowledge is locally bounded, integrating takes place in nonlocally bounded contexts. Finally, scouting and integrating strategies are associated with home nationals as subsidiary leaders.
Managerial Summary
How do multinational enterprises (MNEs) transfer knowledge over space between clusters and between other locations? To explore this question, we construct a typology of four MNE knowledge strategies (replicating, scouting, connecting, and integrating) and examine the spatial, industrial, and leadership conditions of each. By examining 49 headquarter‐subsidiary linkages between Canada and China through detailed interviews, we find that replicating strategies occur in cluster‐to‐non‐cluster contexts or industries with a knowledge gap between the two countries, whereas scouting strategies are typical in non‐cluster‐to‐cluster investments. Connecting and integrating strategies are focused on cluster‐to‐cluster contexts. We also find that while connecting occurs in fields where knowledge is locally bounded, integrating dominates where this is not the case. Finally, scouting and integrating strategies are associated with home nationals as subsidiary leaders.
Internationalization is a vital part of the world economy. It is the process that helps to connect places and firms. It can be based on macro‐economic dimensions in relation to the spatial configuration of activities, but it is also connected to the locational strategy of firms. Internationalization is examined from a range of different perspectives with a focus on how it can be interpreted and what it means for the spatial dynamics of the world economy.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
http://deepblue.lib.umich.edu/bitstream/2027.42/110592/1/smj2214.pdf
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.
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.
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.
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.
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 (MNCs) 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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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