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New insights on the role of location advantages in international innovation

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  • Narula, Rajneesh

    ()
    (Henley Business School, University of Reading)

  • Santangelo, Grazia D.

    ()
    (Facoltà di Scienze Politiche, University of Catania)

Abstract

This paper takes a closer look at the role of location advantages in the spatial distribution of MNE R&D activity. In doing so, we have returned to first principles by revisiting our understanding of L and O advantages and their interaction. We revisit the meaning of L advantages, and offer a succinct differentiation of L advantages. We emphasise the importance of institutions, and flesh out the concept of collocation L advantages, which play an important role at the industry and firm levels of analysis. Just because a country possesses certain L advantages when viewed at a macro-level, does not imply that these are available to all industries or all firms in that location without differential cost. When these are linked to the distinction between location-bound and non location-bound O advantages, and we distinguish between MNEs and subsidiaries it allows for a clearer understanding of the MNE's spatially distributed activities. These are discussed here in the context of R&D, which - in addition to the usual uncertainties faced by firms - must deal with the uncertainties associated with innovation. Although prior literature has sometimes framed the centralisation/decentralisation, spatial separation/collocation debates as a paradox facing firms, when viewed within the context of the cognitive limits to resources, the complexities of institutions, and the slow pace of the evolving specialisation of locations, these are in actuality trade-offs firms must make.

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Bibliographic Info

Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 045.

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Date of creation: 2011
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Handle: RePEc:unm:unumer:2011045

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Related research

Keywords: FDI; foreign investment; direct investment; multinationals; transnational corporations; MNEs; eclectic paradigm; collocation; locational advantage; country specific advantages;

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References

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  1. Blanc, Helene & Sierra, Christophe, 1999. "The Internationalisation of R&D by Multinationals: A Trade-off between External and Internal Proximity," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 23(2), pages 187-206, March.
  2. Sjoerd Beugelsdijk & Philip McCann & Ram Mudambi, 2010. "Introduction: Place, space and organization-- economic geography and the multinational enterprise," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 485-493, July.
  3. Criscuolo, P. & Verspagen, B., 2005. "Does it matter where patent citations come from? Inventor versus examiner citations in European patents," Eindhoven Center for Innovation Studies (ECIS) working paper series, Eindhoven Center for Innovation Studies (ECIS) 05.06, Eindhoven Center for Innovation Studies (ECIS).
  4. John H Dunning, 1980. "Towards an Eclectic Theory of International Production: Some Empirical Tests," Journal of International Business Studies, Palgrave Macmillan, vol. 11(1), pages 9-31, March.
  5. Cantwell, John & Santangelo, Grazia D., 1999. "The frontier of international technology networks: sourcing abroad the most highly tacit capabilities," Information Economics and Policy, Elsevier, vol. 11(1), pages 101-123, March.
  6. Juan Alcácer & Wilbur Chung, 2007. "Location Strategies and Knowledge Spillovers," Management Science, INFORMS, INFORMS, vol. 53(5), pages 760-776, May.
  7. Cantwell, John, 1995. "The Globalisation of Technology: What Remains of the Product Cycle Model?," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 19(1), pages 155-74, February.
  8. John Cantwell & Grazia D. Santangelo, 2000. "Capitalism, profits and innovation in the new techno-economic paradigm," Journal of Evolutionary Economics, Springer, Springer, vol. 10(1), pages 131-157.
  9. John Cantwell & Grazia D. Santangelo, 2002. "special issue: The new geography of corporate research in Information and Communications Technology (ICT)," Journal of Evolutionary Economics, Springer, Springer, vol. 12(1), pages 163-197.
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Cited by:
  1. Narula, Rajneesh, 2013. "Using a 'Systems' Perspective to Explain the Limits of 'New' Multinational Enterprises: the role of 'members-only' location advantages," MERIT Working Papers 033, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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