How do MNEs invent? An invention-based perspective of MNE profitability

Copyright © 2022 The Author(s). Although MNEs create inventions both internally and collaboratively with partners as well as within and across countries, we know very little about the effects that combining such inventive activities have on their profitability. This study develops an invention-based perspective that considers how MNEs' profitability is influenced by the ways they organize the development of inventions across organizational boundaries (internally or collaboratively) and geographic boundaries (within or across countries). This perspective postulates that profitability is not merely driven by advantageous technological endowments but also by how such technological assets have been created. Accordingly, it explains why specific combinations of inventive activities across the two boundaries affect the likelihood of creating breakthrough inventions differently, provide different revenue and cost advantages, and have different effects on MNEs’ profitability. It further explains why cross-country inventions contribute more to profitability when they are internalized, while within-country inventions are more profitable when they are created collaboratively. - Résumé: Bien que les entreprises multinationales (Multinational Enterprises – MNEs) créent, aux échelles transfrontalière et nationale, des inventions à la fois en interne et en collaboration avec des partenaires, nous en savons très peu sur les impacts de la combinaison de telles activités inventives sur leur rentabilité. Cette recherche développe une perspective fondée sur les inventions laquelle examine comment la rentabilité des MNEs est influencée par les manières dont elles organisent le développement des inventions à travers les frontières organisationnelles (internes ou collaboratives) et géographiques (à l'intérieur ou entre des pays). Cette perspective postule que la rentabilité n'est pas seulement façonnée par des facultés technologiques avantageuses, mais aussi par la manière dont ces actifs technologiques ont été créés. Par conséquent, cela explique pourquoi les combinaisons spécifiques des activités inventives à travers les deux frontières influencent différemment la probabilité de créer des inventions disruptives, apportent différents avantages en matière de revenus et de coûts, et exercent divers impacts sur la rentabilité des MNEs. Cela explique en outre pourquoi les inventions transfrontières contribuent davantage à la rentabilité lorsqu'elles sont internalisées, tandis que les inventions au sein d’un pays sont plus rentables lorsqu'elles sont créées en collaboration. - Resumen: A pesar las empresas multinacionales crean invenciones tanto interna como en colaboración con socios, así como dentro y entre los países, sabemos muy poco sobre los efectos que la combinación de tales actividades inventivas tiene en su rentabilidad. Este estudio desarrolla una perspectiva basada en la invención que considera cómo la rentabilidad de las empresas multinacionales está influenciada por las formas en que organizan el desarrollo de las invenciones a través de los limites organizacionales (interna o colaborativamente) y los limites geográficos (dentro o entre países). Esta perspectiva postula que la rentabilidad no está impulsada simplemente por legados tecnológicos ventajosos, sino también por la forma en que se han creado dichos activos tecnológicos. Por ende, explica por qué las combinaciones específicas de actividades inventivas a través de los dos límites afectan de manera diferente la probabilidad de crear invenciones novedosas, proporcionan diferentes ventajas de ingresos y costos, y tienen diferentes efectos en la rentabilidad de las empresas multinacionales. Explica además por qué las invenciones entre países contribuyen más a la rentabilidad cuando son internalizadas, mientras que las invenciones dentro del país son más rentables cuando se crean en colaboración. - Resumo: Embora MNEs criem invenções tanto interna quanto colaborativamente com parceiros, bem como dentro e entre países, sabemos muito pouco sobre os efeitos que a combinação de tais atividades inventivas tem em sua lucratividade. Este estudo desenvolve uma perspectiva baseada em invenções que considera como a lucratividade de MNEs é influenciada pelas formas como organizam o desenvolvimento de invenções além de fronteiras organizacionais (internamente ou colaborativamente) e geográficas (dentro ou entre países). Essa perspectiva postula que lucratividade não é apenas impulsionada por dotações tecnológicas vantajosas, mas também por como esses ativos tecnológicos foram criados. Consequentemente, isso explica por que específicas combinações de atividades inventivas através das duas fronteiras afetam de forma distinta a probabilidade de criar invenções revolucionárias, fornecem receitas e vantagens de custo diferentes e têm efeitos diferentes na lucratividade de MNEs. Ela também explica por que invenções entre países contribuem mais para a lucratividade quando são internalizadas, enquanto invenções dentro do país são mais lucrativas quando são criadas de forma colaborativa. - 摘要 虽然跨国公司(MNE)同时在内部和通过与伙伴合作在国内和跨国创造发明, 但我们对此类发明活动的结合对其盈利率的影响知之甚少。本研究提出了一个基于发明的视角, 该视角考虑了MNE的盈利率如何受到它们跨越组织边界 ( (内部或协作) 和地理边界 ( 国内或跨国 ) 织发明开发的方式的影响。这一视角假定盈利率不仅受有利的技术禀赋的驱动, 而且还受这些技术资产的创造方式的驱动。因此, 它解释了为什么跨越两个边界的发明活动的特定组合对创造突破性发明的可能性产生不同的影响, 提供不同的收入和成本优势, 并对MNE的盈利率产生不同的影响。它还进一步解释了为什么跨国发明在内部化时对盈利率的贡献更大, 而国内发明在合作创造时更有利

Factors affecting innovation and imitation of ICT in the agrifood sector

Diffusion of innovations has gained a lot of attention and concerns different scientific fields. Many studies, which examine the determining factors of technological innovations in the agricultural and agrifood sector, have been conducted using the widely used Technology Accepted Model, for a random sample of farmers or firms engaged in agricultural sector. In the present study, a holistic examination of the determining factors that affect the propensity of firms to innovate or imitate, is conducted. The diffusion of ICT tools of firms which are engaged in the NACE 02/03 as well as in the NACE 10/11 classifications for 49 heterogeneous national markets is examined, using the Bass model. The innovation parameter is positively associated with rural income, female employment, export activity and education of farmers, while the imitation parameter is increased in countries whose societies are characterized by uncertainty avoidance

Knowledge Base, Exporting Activities, Innovation Openness and Innovation Performance: A SEM Approach Towards a Unifying Framework

In this paper we demonstrate the complexity that regulates the innovation-exports nexus. In particular we argue that innovation and exports should be treated as latent variables in order to account for as many facets possible thus, accounting for multifaceted heterogeneity. In this context, the role of innovation openness ought to be highlighted within a unified framework, as it is considered an additional activity of firms' knowledge creation strategy. In this line, innovation and exporting orientation are ruled by the firms' strategic mix comprised of internal knowledge creation processes and the diversity of innovation openness. Theoretical and empirical links between these major components are identified and measured employing a Structural Equation Modelling (SEM) approach on a sample of Greek R&D-active manufacturing firms. Empirical findings corroborate the complexity of relationships and indicate that the firms' knowledge base and open innovation strategy regulate via complementary and substitution relationships firms' innovation and export performance

A retrospective and agenda for future research on Chinese outward foreign direct investment

Our original paper “The determinants of Chinese Outward Foreign Direct Investment” was the first theoretically based empirical analysis of the phenomenon. It utilised internalisation theory to show that Chinese state-owned firms reacted to home country market imperfections to surmount barriers to foreign entry arising from naivety and the lack of obvious ownership advantages, leveraging institutional factors including favourable policy stimuli. This special theory explained outward foreign direct investment (OFDI) but provided surprises. These included the apparent appetite for risk evinced by these early investors, causing us to conjecture that domestic market imperfections, particularly in the domestic capital market, might be responsible. The article stimulated a massive subsequent, largely successful, research effort on emerging country multinationals. In this Retrospective article we review some of the main strands of research that ensued, for the insight they offer for the theme of our commentary. Our theme is that theoretical development can only come through embracing yet more challenging, different, and new contexts, and we make suggestions for future research directions

FDI in hot labour markets: The implications of the war for talent

This paper highlights an inherent contradiction that exists within investment promotion activities in rich countries. Since the financial crisis, many inward investment agencies have shifted their activities from job creation per se to seeking to attract investment in high-tech activities. Such knowledge-intensive sectors are engaged in what has become referred to as “the war for talent”, so locations need to understand their value proposition to firms, especially where labour is tight. This paper explores the implications of this, in terms of the impact on employment and earnings of high skilled labour. We show that, because skill shortages already exist in many of these sectors, seeking to attract inward investment in these sectors simply causes the earnings of such workers to be bid up, and employment in the incumbent sector to fall. We highlight the over-riding importance that firms place on the availability of skilled labour when determining locations, and how policies which promote labour market flexibility, particularly through investment in skills to address skill shortages, can significantly mitigate the adverse effects, which tend to be more keenly felt in poorer regions of Europe where skilled labour is in even shorter supply

Sources of productivity spillovers: panel data evidence from China

This paper assesses sources of productivity spillovers in China\u27s electric and electronic manufacturing industry using a rich panel data-set of 25,360 firms observed over the period 2004-2007. This industry is characterized by its important reliance on technology. In particular, the paper focuses on the role of other firms\u27 productivity as well as productivity shifters in affecting own firm-level total factor productivity. In addition, this paper examines the possible difference between spillovers from foreign-owned units and from units which participate at global markets through exporting in comparison to domestically-owned and non-exporting units. We find evidence of stronger spillovers from exporting firms than from non-exporting firms. This is true for foreign-owned as well as domestic exporters. The strength of the spillover effects differ across subsectors