The Influence of Clustering on MNE location and Innovation in Great Britain
2011 (English)In: Innovation and Multidimensional Entrepreneurship: Economic, Social and Academic Aspects / [ed] Iréne Bernard, ABM-media AS, 2011Chapter in book (Other academic)
This paper addresses two questions: what, if anything, is the influence of geographicconcentration of economic activity on patterns of foreign direct investment; what is therelationship, if any, between geographic concentration of economic activity, multinationality andinnovation. The paper identifies the consensus view which is emerging in the literature, based onboth theory and evidence, that strong clusters are likely to be attractive for inward directinvestment and that they promote innovation. The paper tests whether this relationship is evidentin Great Britain using data derived from the UK’s Annual Foreign Direct Investment survey andthe UK’s Community Innovation Survey 2007. It addresses a surprising gap in the emergingliterature by also examining the relationship between cluster strength and outward directinvestment, thereby testing Porter’s (1990) claim in The Competitive Advantage of Nations, thatadvantages gained in strong clusters would be the foundations of international competitiveness.The paper also distinguishes between two different types of agglomeration economy, localisationeconomies based on collocation of firms in related lines of activity, and urbanisation economiesbased on the overall concentration of economic activity in a particular region, a distinction mostof the emerging literature in International Business has not made clear. The first set of modelsexamine the propensity to engage in outward direct investment and the geographic pattern offoreign ownership of firms active in Great Britain and find that both are positively related tocluster strength, with localisation economies being more important than urbanisation economies.T wo models of innovation are estimated, the first examines what factors influence firms to beinnovative and the second what influences innovation effort as measured by R&D intensity. Inboth cases there is evidence that regional agglomeration promotes innovation and that there arestronger effects flowing from own industry agglomeration than from broader regional scale.
Place, publisher, year, edition, pages
ABM-media AS, 2011.
, Uddevalla symposiet
Entrepreneurship, regional science, innovation, economics, urban development
IdentifiersURN: urn:nbn:se:kth:diva-70378ISBN: 978-91-633-7747-1OAI: oai:DiVA.org:kth-70378DiVA: diva2:486228
QC 201204102012-01-302012-01-302012-04-10Bibliographically approved