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The technological relationships between indigenous firms and foreign-owned MNCs in the European regions

  • John Cantwell

    ()

  • Simona Iammarino

    ()

It has been argued that the accumulation of technological competence is a path-dependent and context-specific process, being partly firm-specific and partly location-specific. MNCs spread the competence base of the firm, and acquire new technological assets or sources of competitive advantage. For their part indigenous firms benefit from local knowledge spillovers from MNCs, given the access of the latter to complementary streams of knowledge being developed in other locations. This paper examines how the particular corporate technological trajectories of multinational corporations (MNCs) have interacted with spatially-specific resources for the creation of new competence in some of the leading regions in Europe. Yet foreign investments, and the associated skills and capabilities that they bring, are arguably of crucial importance as a catalyst for local growth: learning curve advantages are mainly people- and institution-embodied and regional systems may substantially benefit from global corporations investing in innovation and local human capital. Although a break has thus occurred with the conventional economic approach - in which spatial factors shaping innovation were usually considered secondary (if not thoroughly negligible) - too little is still known about the regional scope with respect to the geographical location of innovatory capacity in the global economy. This is all the more relevant in the presence of an in-depth process of economic integration, as is the case of the EU, which arose from the need to define the problems, and the policies aimed at solving them, in terms of geographical location and centre/periphery economic convergence. We use data on the patents granted in the United States to large firms for inventions emanating from research facilities located in eight selected European countries (Belgium, France, Germany, Italy, the Netherlands, Sweden, Switzerland and the UK) over a 27 year period (1969-1995). The location-specific patent data is complemented through the use of other indicators such as the regional distribution of expenditure on basic scientific research, and the R&D expenditure personnel given by the EU database New-Cronos-Regio. The aim is to improve our understanding of some aspects of the effects of Innovation and Globalisation on Firms and Regions - i.e. technological spillovers - by examining the patterns of technological (by technological field of the largest firms) and production (by industry of the output of the largest firms) specialisation in each region. Differences between the two specialisation profiles may be indicative of technological diversification by industry, and hence potential technological overlaps between industries. These overlaps may be more pronounced in higher order centres, due to their greater technological breadth (which may show a greater technological diversification within the typical industry represented in the region, and not merely a greater span of industries). We then distinguish between intermediate centres (with significant levels of technologically focused activity) and lower order regions (backward regions, with little activity at all). The patterns of technological diversification of industries are then checked by examining which firms are responsible for a positive technological specialisation in the case of a region that lacks specialisation in the equivalent industrial category, and how this fits into the overall pattern of technological diversification of the firms in question.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa01p269.

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Date of creation: Aug 2001
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Handle: RePEc:wiw:wiwrsa:ersa01p269
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  1. Archibugi, Daniele & Michie, Jonathan, 1995. "The Globalisation of Technology: A New Taxonomy," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 121-40, February.
  2. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  3. Zvi Griliches, 1998. "Patent Statistics as Economic Indicators: A Survey," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 287-343 National Bureau of Economic Research, Inc.
  4. John H. Dunning & Peter Robson, 1987. "Multinational Corporate Integration and Regional Economic Integration," Journal of Common Market Studies, Wiley Blackwell, vol. 26(2), pages 103-125, December.
  5. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
  6. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-40, June.
  7. Cantwell, John & Janne, Odile, 1999. "Technological globalisation and innovative centres: the role of corporate technological leadership and locational hierarchy1," Research Policy, Elsevier, vol. 28(2-3), pages 119-144, March.
  8. Brezis, Elise S & Krugman, Paul R, 1997. " Technology and the Life Cycle of Cities," Journal of Economic Growth, Springer, vol. 2(4), pages 369-83, December.
  9. Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
  10. John Cantwell & Simona Iammarino, 2000. "Multinational Corporations and the Location of Technological Innovation in the UK Regions," Regional Studies, Taylor & Francis Journals, vol. 34(4), pages 317-332.
  11. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-48, November.
  12. Soete, Luc, 1987. "The impact of technological innovation on international trade patterns: The evidence reconsidered," Research Policy, Elsevier, vol. 16(2-4), pages 101-130, August.
  13. John Cantwell & Simona Iammarino, 1998. "MNCs, Technological Innovation and Regional Systems in the EU: Some Evidence in the Italian Case," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(3), pages 383-408.
  14. Siraona Iammarino & John Cantwell, 2005. "The technological innovation of multinational corporations in the French regions," Revue d'Économie Industrielle, Programme National Persée, vol. 109(1), pages 9-28.
  15. Archibugi, Daniele & Iammarino, Simona, 1999. "The policy implications of the globalisation of innovation," Research Policy, Elsevier, vol. 28(2-3), pages 317-336, March.
  16. Audretsch, David B & Feldman, Maryann P, 1995. "Innovative Clusters and the Industry Life Cycle," CEPR Discussion Papers 1161, C.E.P.R. Discussion Papers.
  17. Quah, Danny T., 1996. "Regional convergence clusters across Europe," European Economic Review, Elsevier, vol. 40(3-5), pages 951-958, April.
  18. Krugman, Paul, 1991. "History and Industry Location: The Case of the Manufacturing Belt," American Economic Review, American Economic Association, vol. 81(2), pages 80-83, May.
  19. Archibugi, Daniele & Pianta, Mario, 1992. "Specialization and size of technological activities in industrial countries: The analysis of patent data," Research Policy, Elsevier, vol. 21(1), pages 79-93, February.
  20. Raffaele Paci & Stefano Usai, 2000. "Technological Enclaves and Industrial Districts: An Analysis of the Regional Distribution of Innovative Activity in Europe," Regional Studies, Taylor & Francis Journals, vol. 34(2), pages 97-114.
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  22. Carlsson, B & Stankiewicz, R, 1991. "On the Nature, Function and Composition of Technological Systems," Journal of Evolutionary Economics, Springer, vol. 1(2), pages 93-118, April.
  23. John Cantwell & Grazia D. Santangelo, 2000. "Capitalism, profits and innovation in the new techno-economic paradigm," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 131-157.
  24. Miller, Roger, 1994. "Global R & D networks and large-scale innovations: The case of the automobile industry," Research Policy, Elsevier, vol. 23(1), pages 27-46, January.
  25. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
  26. John Cantwell, 1987. "The Reorganization of European Industries After Integration: Selected Evidence on the Role of Multinational Enterprise Activities," Journal of Common Market Studies, Wiley Blackwell, vol. 26(2), pages 127-151, December.
  27. repec:fth:harver:1473 is not listed on IDEAS
  28. Cantwell, John & Iammarino, Simona, 2001. "EU Regions and Multinational Corporations: Change, Stability and Strengthening of Technological Comparative Advantages," Industrial and Corporate Change, Oxford University Press, vol. 10(4), pages 1007-37, December.
  29. Quah, Danny, 1996. "Regional Convergence Clusters Across Europe," CEPR Discussion Papers 1286, C.E.P.R. Discussion Papers.
  30. Cantwell, John, 1995. "The Globalisation of Technology: What Remains of the Product Cycle Model?," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 155-74, February.
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