Location Strategies of Multinationals from Emerging Countries in the EU Regions. LEQS Discussion Paper No. 93/2015 May 2015

This paper contributes to the current debate in both Economic Geography and International Business on the nature and strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs). The paper fills a relevant gap in the existing literature by shedding new light on the location strategies of EMNEs at the national and regional level, looking at their investment drivers and systematically comparing them with those of multinationals from advanced countries (AMNEs). The empirical analysis looks at the location choices of MNEs in the European Union (EU-25) regions and unveils that EMNEs follow distinctive location strategies. Their attraction into large regional markets is similar to AMNEs as well as their irresponsiveness to efficiency seeking motives. Conversely, the most knowledge-intensive investments of EMNEs respond mainly to two ‘attraction’ factors: strategic assets (in the form of local technological dynamism) and the agglomeration of foreign investments in the same business functions. In addition, both the national and the regional levels are simultaneously relevant to EMNEs decisions. The empirical analysis is based on 22,065 projects undertaken by MNEs from three selected groups of countries (intra-EU, North America, Emerging Countries) into the EU2

From new to the firm to new to the world. Effect of geographical proximity and technological capabilities on the degree of novelty in emerging economies

This paper investigates empirically what it takes for a firm to move from new to the firm to new to the domestic market and new to the world innovations. More specifically, the paper analyses the relationship between, on the one hand, the degree of novelty of product innovation and on the other hand the accumulation of technological capabilities at firm level as well as the geographical spread of the innovation activities of the firm. The analysis is based on a unique firm level data collected in Pune(India) and Beijing (China) in 2008. The paper shows that the role of the region supporting the move from new to the firm to new to the world is limited. In order to achieve a higher degree of innovation global networks are more important than local networks.degree of novelty; technological capabilities; technological sourcing; research collaboration; region

Cluster Complexes: A Framework for Understanding the Internationalisation of Innovation Systems

The literature on clustering that has developed over the last two decades or so has given us a wealth of information on the formation and competitiveness of places in the global economy. Similarly, the systems literature on innovation has been valuable in moving the debate around technology from a focus on the entrepreneur to one than encompasses institutions, government, suppliers, customers and universities. However, there remains an important limit to this research; the borders of political jurisdictions, usually nation states, typically delineate the studies. It is argued in this paper that during an era when the international architecture of production relationships is changing, this view of systems is hindering its further development. This paper briefly examines what we have learnt of innovation systems, including clustering and also explores the limitations of this work. From this foundation it is proposed in this paper that a framework which understands clusters as nodes within extra-territorial networks is a promising approach for internationalising the systems of innovation perspective. The advantage of the approach presented here is that it can simultaneously capture regional specialisations and be disaggregated enough to apply on a technology / sectoral basis. Another principle advantage is that such a framework goes someway towards an understanding of interregional and international trade that is consistent with what other studies have shown of the development of innovation within particular geographic locations. The paper draws from extensive data analysis of industrial interdependencies that cross national borders to support the case for cluster complexes that transcend regional and national borders.innovation systems; clusters; internationalisation

The Irish Pharmaceutical Industry over the Boom Period and Beyond

The pharmaceutical industry has been one of the strongest performing sectors of the Celtic Tiger era. During the past two decades, employment growth in the sector has been strong and continuous, even when, in recent years, employment in other manufacturing sectors has been contracting. Although positive in itself, from a dynamic regional development perspective it is important to explore the qualitative changes in the types of activities that are conducted in Ireland. Adopting a global production network approach, the paper examines Ireland’s changing role in global production networks within the pharmaceutical industry, focussing on the different components of manufacturing and R&D. The analysis shows that Ireland’s involvement in manufacturing has shifted in the direction of relatively higher value generating activities. Within R&D, although the level of value creation has increased substantially, Ireland’s involvement remains concentrated in the (relatively) lower value generating activities of the global R&D network. In addition, the sector remains strongly dominated by foreign direct investment so that a large share of the created value is not captured within Ireland.

From Quantity to Quality: Challenges for Investment Promotion Agencies

Most investment promotion agencies worldwide are now placing a higher emphasis on attracting high "quality" FDI, including R&D centers and headquarter functions as well as knowledgeintensive industries such as information and communication technologies, biotechnology or nanotechnology. We argue that this requires a different approach than policies focused on the "quantity" of FDI inflows, leading to changes in the policy mix and in the approach to performance measurement. Targeting quality entails a shift from a mindset that prioritizes attraction of greenfield investments towards one where the focus is on subsidiary development. Another implication is that the interplay between FDI policies and innovation policies becomes more relevant and needs to be further nurtured. We focus on the management challenges that investment promotion agencies face in this transition from quantity to quality, drawing attention to the consequences for their human capital, structural capital and relational capital strategies.Aftercare, FDI, intellectual capital, investment promotion, R&D, subsidiary development

Regional strategic assets and the location strategies of emerging countries’ multinationals in Europe

This paper explores the location strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs) in search for regional strategic assets. The analysis is based on a systematic comparison between EMNEs and multinationals from advanced countries (AMNEs) in order to unveil similarities and differences between these two major sources of foreign investments into the regions of the European Union. The empirical results suggest that EMNEs follow a distinct logic in their location strategies because they are attracted by the availability of technological competences only when their subsidiaries pursue more sophisticated and technology-intensive activities. Conversely EMNEs share some behavioural similarities with AMNEs in their response to the spatial agglomeration of investments

Global value chains from an evolutionary economic geography perspective: a research agenda

The research agendas of evolutionary economic geography (EEG) and global value chains (GVCs) have developed more or less independently from each other, with little interaction so far. This is unfortunate because both streams of literature have a lot to offer each other. This paper explores how, looking at four strands in the GVC literature. Promising crossovers between EEG and the GVC literature are identified, but also some missing links that need to be taken up in future research. These new research avenues, promoting the adoption of an evolutionary perspective on GVCs, are expected to enrich both literatures in mutual ways.publishedVersio

Manufacturing reshoring and its limits:the UK automotive case

This paper explores the meaning of reshoring and its drivers in the case of UK manufacturing and in particular its automotive sector. Drawing on interviews, policy reviews and a range of recent surveys, the paper finds that while reshoring is a discernable trend in UK manufacturing, it is less pronounced than many have claimed and that – in the UK case at least - there are severe limits as to how far this reshoring trend can go, particularly in relation to the availability of skills and finance in the supply chain. This is in turn raises questions over the stance of British policy and whether more could be done, with comparisons made to US experience