Shifts in Innovation Power to Brazil and India: Insights from the Auto and Software Industries
The global innovation map is changing. Until a few years ago innovation activities were concentrated in the US, Europe and Japan. Not anymore. The rising powers of China, India and Brazil are encroaching on the innovation stronghold of the old powers. This report explores how deep the change goes and how we can explain it. Most of the literature explains this shift in innovation power by concentrating on factors within the rising powers, such as their investment in high-level education, their low labour cost, their big and expanding internal markets and others. This report concentrates on explanatory factors that emanate from the old powers, notably the organisational decomposition of the innovation process (ODIP). The empirical focus is on the global value chains that link Brazilian auto and Indian software suppliers with lead firms in the US and Europe. The report shows that subsidiaries and independent suppliers in Brazil and India were involved in advanced innovation capabilities: they engaged not only in ‘applied’ development, but also in ‘systemic’ development of products and services. In other words, the build-up of innovation capabilities goes further than is generally recognised. Most of the report is then concerned with unravelling the processes through which this occurs, showing that ODIP emanating from US and European lead firms has knock-on effects within Brazil and India. The research also distinguishes between different types of ODIP showing that the biggest organisational and geographical changes occur when innovation and production activities are tightly integrated. The resulting build-up of innovation capability is only partially visible in conventional R&D indicators. The causal connection between ODIP in the old powers and increase of innovation capabilities in the new powers is not one way. The accumulation of innovation capabilities in the new powers increases the possibilities for further rounds of ODIP in the old powers.
|Date of creation:||Feb 2012|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Giuliani, Elisa & Pietrobelli, Carlo & Rabellotti, Roberta, 2005.
"Upgrading in Global Value Chains: Lessons from Latin American Clusters,"
Elsevier, vol. 33(4), pages 549-573, April.
- Elisa Giuliani & Carlo Pietrobelli & Roberta Rabellotti, 2004. "Upgrading in global value chains: lessons from latin american clusters," Working Papers 72, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
- Chaminade, Cristina & Vang, Jan, 2008.
"Globalisation of Knowledge Production and Regional Innovation Policy: Supporting Specialized Hubs in the Bangalore Software Industry,"
Papers in Innovation Studies
2008/20, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
- Chaminade, Cristina & Vang, Jan, 2008. "Globalisation of knowledge production and regional innovation policy: Supporting specialized hubs in the Bangalore software industry," Research Policy, Elsevier, vol. 37(10), pages 1684-1696, December.
- Peter Maskell & Torben Pedersen & Bent Petersen & Jens Dick-Nielsen, 2005.
"Learning Paths to Offshore Outsourcing - From Cost Reduction to Knowledge Seeking,"
DRUID Working Papers
05-17, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- Peter Maskell & Torben Pedersen & Bent Petersen & Jens Dick-Nielsen, 2007. "Learning Paths to Offshore Outsourcing: From Cost Reduction to Knowledge Seeking," Industry and Innovation, Taylor & Francis Journals, vol. 14(3), pages 239-257.
- Arie Lewin & Silvia Massini & Carine Peeters, 2008.
"Why are companies offshoring innovation ?the emerging global race for talent,"
Working Papers CEB
08-009, ULB -- Universite Libre de Bruxelles.
- Arie Lewin & Silvia Massini & Carine Peeters, 2009. "Why are companies offshoring innovation ?The emerging global race for talent," ULB Institutional Repository 2013/9073, ULB -- Universite Libre de Bruxelles.
- Cooke, Phil, 2005. "Regionally asymmetric knowledge capabilities and open innovation: Exploring 'Globalisation 2'--A new model of industry organisation," Research Policy, Elsevier, vol. 34(8), pages 1128-1149, October.
- Suma S. Athreye, 2005. "The Indian software industry and its evolving service capability," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 393-418, June.
- Lynn Mytelka, 2000. "Local Systems Of Innovation In A Globalized World Economy," Industry and Innovation, Taylor & Francis Journals, vol. 7(1), pages 15-32.
- Jan Vang & Mikkel Lucas Overby, 2006. "Transnational Communities, Offshore Outsourcing and Offshore Subsidiaries: The Case of the Indian IT Service Industry," Chapters, in: Asia’s Innovation Systems in Transition, chapter 3 Edward Elgar Publishing.
- Anabel Marin & Martin Bell, 2006. "Technology spillovers from Foreign Direct Investment (FDI): the active role of MNC subsidiaries in Argentina in the 1990s," Journal of Development Studies, Taylor & Francis Journals, vol. 42(4), pages 678-697.
- Lall, Sanjaya, 1992. "Technological capabilities and industrialization," World Development, Elsevier, vol. 20(2), pages 165-186, February.
- Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
- Ram Mudambi, 2008. "Location, control and innovation in knowledge-intensive industries," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 699-725, September.
- Timothy J. Sturgeon, 2002. "Modular production networks: a new American model of industrial organization," Industrial and Corporate Change, Oxford University Press, vol. 11(3), pages 451-496, June.
- Madhok, Anoop & Liu, Carl, 2006. "A coevolutionary theory of the multinational firm," Journal of International Management, Elsevier, vol. 12(1), pages 1-21, March.
- Gerybadze, Alexander & Reger, Guido, 1999. "Globalization of R&D: recent changes in the management of innovation in transnational corporations," Research Policy, Elsevier, vol. 28(2-3), pages 251-274, March.
- Beugelsdijk, Sjoerd & Pedersen, Torben & Petersen, Bent, 2009. "Is there a trend towards global value chain specialization? -- An examination of cross border sales of US foreign affiliates," Journal of International Management, Elsevier, vol. 15(2), pages 126-141, June.
- Ernst, Dieter & Kim, Linsu, 2002. "Global production networks, knowledge diffusion, and local capability formation," Research Policy, Elsevier, vol. 31(8-9), pages 1417-1429, December.
- Yun-Chung Chen, 2008. "Why Do Multinational Corporations Locate Their Advanced R&D Centres in Beijing?," Journal of Development Studies, Taylor & Francis Journals, vol. 44(5), pages 622-644.
- Andersson, Ulf & Björkman, Ingmar & Forsgren, Mats, 2005. "Managing subsidiary knowledge creation: The effect of control mechanisms on subsidiary local embeddedness," International Business Review, Elsevier, vol. 14(5), pages 521-538, October.
- Patibandla, Murali & Petersen, Bent, 2002. "Role of Transnational Corporations in the Evolution of a High-Tech Industry: The Case of India's Software Industry," World Development, Elsevier, vol. 30(9), pages 1561-1577, September.
- Myriam Mariani, 2002.
"Next to Production or to Technological Clusters? The Economics and Management of R&D Location,"
Journal of Management & Governance,
Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 6(2), pages 131-152, May.
- Mariani,Myriam, 1999. "Next to Production or to Technological Clusters? The Economics and Management of R&D Location," Research Memorandum 027, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
- Andrea Morrison & Carlo Pietrobelli & Roberta Rabellotti, 2008.
"Global Value Chains and Technological Capabilities: A Framework to Study Learning and Innovation in Developing Countries,"
Oxford Development Studies,
Taylor & Francis Journals, vol. 36(1), pages 39-58.
- Andrea Morrison & Carlo Pietrobelli & Roberta Rabellotti, 2007. "Global Value Chains and Technological Capabilities: A Framework to Study Learning and Innovation in Developing Countries," Working Papers 117, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
- Ram Mudambi & Pietro Navarra, 2004. "Is knowledge power? Knowledge flows, subsidiary power and rent-seeking within MNCs," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(5), pages 385-406, September.
- Yeung, Henry Wai-chung & Liu, Weidong & Dicken, Peter, 2006. "Transnational corporations and network effects of a local manufacturing cluster in mobile telecommunications equipment in China," World Development, Elsevier, vol. 34(3), pages 520-540, March.
- Timothy J. Sturgeon, 2003. "What really goes on in Silicon Valley? Spatial clustering and dispersal in modular production networks," Journal of Economic Geography, Oxford University Press, vol. 3(2), pages 199-225, April.
- Hong, Jacky F.L. & Nguyen, Thang V., 2009. "Knowledge embeddedness and the transfer mechanisms in multinational corporations," Journal of World Business, Elsevier, vol. 44(4), pages 347-356, October.
- Stephen Flowers, 2007. "Organizational capabilities and technology acquisition: why firms know less than they buy," Industrial and Corporate Change, Oxford University Press, vol. 16(3), pages 317-346, June.
- Altenburg, Tilman & Schmitz, Hubert & Stamm, Andreas, 2008. "Breakthrough China's and India's Transition from Production to Innovation," World Development, Elsevier, vol. 36(2), pages 325-344, February.
- Timothy Sturgeon & Johannes Van Biesebroeck & Gary Gereffi, 2008. "Value chains, networks and clusters: reframing the global automotive industry," Journal of Economic Geography, Oxford University Press, vol. 8(3), pages 297-321, May.
- Dossani, Rafiq & Kenney, Martin, 2007. "The Next Wave of Globalization: Relocating Service Provision to India," World Development, Elsevier, vol. 35(5), pages 772-791, May.
- H. Schmitz & P. Knorringa, 2000. "Learning from Global Buyers," Journal of Development Studies, Taylor & Francis Journals, vol. 37(2), pages 177-205.
- Suma Athreye & John Cantwell, 2005.
"Creating Competition? Globalisation and the emergence of new technology producers,"
Open Discussion Papers in Economics
52, The Open University, Faculty of Social Sciences, Department of Economics.
- Athreye, Suma & Cantwell, John, 2007. "Creating competition?: Globalisation and the emergence of new technology producers," Research Policy, Elsevier, vol. 36(2), pages 209-226, March.
- Saliola, Federica & Zanfei, Antonello, 2009. "Multinational firms, global value chains and the organization of knowledge transfer," Research Policy, Elsevier, vol. 38(2), pages 369-381, March.
- Christensen, Jens Froslev & Olesen, Michael Holm & Kjaer, Jonas Sorth, 2005. "The industrial dynamics of Open Innovation--Evidence from the transformation of consumer electronics," Research Policy, Elsevier, vol. 34(10), pages 1533-1549, December.
- Brian J. Fifarek & Francisco M. Veloso, 2010. "Offshoring and the global geography of innovation," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 559-578, July.
- Evans, Peter B., 1992. "Indian informatics in the 1980s: The changing character of state involvement," World Development, Elsevier, vol. 20(1), pages 1-18, January.
- Hobday, Michael & Rush, Howard, 2007. "Upgrading the technological capabilities of foreign transnational subsidiaries in developing countries: The case of electronics in Thailand," Research Policy, Elsevier, vol. 36(9), pages 1335-1356, November.
- Hubert Schmitz & Simone Strambach, 2009. "The organisational decomposition of innovation and global distribution of innovative activities: insights and research agenda," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 2(4), pages 231-249.
- Simon Commander & Rupa Chanda & Mari Kangasniemi & L. Alan Winters, 2008. "The Consequences of Globalisation: India's Software Industry and Cross-border Labour Mobility -super-1," The World Economy, Wiley Blackwell, vol. 31(2), pages 187-211, 02.
- Lema, Rasmus, 2010. "Adoption of Open Business Models in the West and Innovation in India's Software Industry," MPRA Paper 49589, University Library of Munich, Germany.
- Zanfei, Antonello, 2000. "Transnational Firms and the Changing Organisation of Innovative Activities," Cambridge Journal of Economics, Oxford University Press, vol. 24(5), pages 515-542, September.
- Namchul Shin & Kenneth Kraemer & Jason Dedrick, 2009. "R&D, Value Chain Location and Firm Performance in the Global Electronics Industry," Industry and Innovation, Taylor & Francis Journals, vol. 16(3), pages 315-330.
- Hansen, Michael W. & Pedersen, Torben & Petersen, Bent, 2009. "MNC strategies and linkage effects in developing countries," Journal of World Business, Elsevier, vol. 44(2), pages 121-130, April.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:49591. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.