From toys to automobiles: foreign investment, firm heterogeneity and intermediaries in a Portuguese industry

In the literature on territorial innovation systems there is a constant tension between the effect of endogenous and exogenous factors and their relative importance. In order to address this tension several approaches have sought to conceptualize the relational and multi-scalar dimension of innovation and to explain how external knowledge and economic flows in conjunction with regional contexts combine to produce regional growth, stagnation or decline. This paper will contribute to this debate, while also highlighting that even at the local level there is substantial heterogeneity between firms. It will also shed light on the role of intermediary organizations that can help address information and power asymmetries between multinational corporations and less competitive local firms. Empirically it will draw on the case study of the Portuguese moulds industry, which has successfully adapted to shifts in the global economy by drawing on local resources while also remaining integrated into global value chains.