the role of non economic endowments introduction to the special section on what we know and what we should know about international knowledge sourcing recent developments in the pattern of international knowledge sourcing have highlighted a new international division of labor in knowledge production which now is affecting emerging as well as advanced countries the source of this division of labor has been identified as residing in the changing economic endowments of these countries we extend this by suggesting that the new international allocation of knowledge related activities is related strongly to a country s non economic endowments our arguments provide context to the papers in this special section

cluster or capture manufacturing foreign direct investment external economies and agglomeration phelps n a cluster or capture manufacturing foreign direct investment external economies and agglomeration regional studies this paper reviews the nature and significance of external economies associated with multinational enterprise mne participation in the manufacturing industries of host economies it argues that the balance of forces of internalization and externalization is currently skewed towards the former and the interests of mnes rather than the latter and the interests of local and national communities and governments a stylized comparison of developmental and competition state interventions in relation to mnes and their foreign direct investment fdi suggests that in the absence of co ordinated interventions by governments there will commonly be a failure of the logic of internalization to permit localized processes of externalization indeed the experiences of the competition states of the uk and the usa highlight the potential for the partial internalization or capture of loc

free trade agreements in the americas are the trade effects larger than anticipated this paper argues that the competitive liberalisation of national governments of the past several decades reflects national governments expectations of larger trade impacts from regional economic integration agreements eias than typical ex ante economic models have suggested moreover we show that previous typically cross section ex post empirical evaluations of the effects of eias on trade have seriously over or underestimated the effects partly due to ignoring the endogenous self selection bias of country pairs into eias accounting for this bias we find that economic integration agreements in the americas have had much larger impacts on trade over the period 1960 2000 than previously found and the ex post estimates are less fragile than those in earlier cross section analyses the results shed further light on understanding the causes and consequences of the growth of regionalism in the world

deep integration and production networks an empirical analysis this paper investigates the two way relationship between deep integration and production networks trade we capture deep integration with a set of indices constructed in terms of policy areas covered in preferential trade agreements we estimate an augmented gravity equation to investigate the impact of deep integration on production networks trade the results show that on average signing deeper agreements increases production networks trade between member countries by almost 12 percentage points in addition the impact of deep integration is higher for trade in automobile parts and information and technology products compared with textile products to analyse whether higher levels of network trade increase the likelihood of signing deeper agreements we follow the literature on the determinants of preferential trade agreements the estimation results show that after taking into account other pta determinants a ten percentage increase in the share of production network trade over total trade increases the depth of an agreement by approximately 6 percentage points in addition the probability of signing deeper agreements is higher for country pairs involved in north south production sharing and for countries belonging to the asia region

regional versus global production networks where does latin america stand this article quantifies the effects of the latin american integration association laia and the southern common market mercosur on the trade of intermediate goods and also on the trade of final goods it is the first article to investigate whether increasing imports of intermediate goods from different regions to latin america have led to higher exports of final and intermediate goods the article uses sectoral data for trade in goods between 11 laia members over the period 1991 2008 the main results indicate evidence of increasing regional production networks which have strengthened in the 2000s moreover the findings show evidence of the emergence of global production networks especially with respect to intermediate imports from china

r d offshoring and the productivity growth of european regions the recent increase in r d offshoring has raised fears that knowledge and competitiveness in advanced countries may be at risk of hollowing out at the same time economic research has stressed that this process is also likely to allow some reverse technology transfer and foster growth at home this paper addresses this issue by investigating the extent to which r d offshoring is associated with productivity dynamics of european regions we find that offshoring regions have higher productivity growth but this positive effect fades with the number of investment projects carried out abroad a large and positive correlation emerges between the extent of r d offshoring and the home region productivity growth supporting the idea that carrying out r d abroad strengthens european competitiveness

the internationalisation of r d by multinationals a trade off between external and internal proximity overseas production is frequently seen as a force inducing the decentralization of rd it should on the contrary be completed by the implementation of relations of proximity internal to the firm which they refer to as internal proximity from this perspective the multinational firm that manages dispersed r d units is seen as facing a tension an organizational trade off between external proximity and internal proximity copyright 1999 by oxford university press

national scientific capacity and r d offshoring abstract this paper presents new evidence regarding the role of national scientific capacity in driving patterns of r d offshoring using a larger and more comprehensive dataset than has hitherto been used and applying it in a gravity model framework our results unambiguously support the importance of inventor country scientific capacity in attracting offshored r d as expected the home country s scientific capacity is also found to play a positive role we find that in fact on average firms source technology from less technologically advanced nations suggesting that firms offshore to access niche skills

offshoring administrative and technical work new fields for understanding the global enterprise in this paper we introduce the journal of international business studies special issue on offshoring administrative and technical services ats in doing so we have attempted to locate the topic within the international business research tradition as well as suggest challenges and opportunities that the phenomenon offers to theoretical and empirical research in the field we examine the interplay of costs knowledge and innovation in the evolution of ats offshoring from modest beginnings to its current stature as an accepted business practice we suggest that understanding the continuing evolution of ats offshoring requires researchers to take into account not only the business imperative of cost saving but also a more complex set of underlying factors and potential outcomes we argue that the rapid growth of ats offshoring has brought about an accumulation of resources including financial flows knowledge infrastructure and human capital to create new platforms for knowledge creation and innovation low costs may characterize the initial conditions for offshoring but they also provide the basis for up market moves as firms increasingly pursue innovation based strategies we introduce the papers in the special issue as integral elements in our discussion contributing new ideas that stimulated our thinking and hopefully will do the same for others seeking to understand this emerging area of globalization and international managerial practice journal of international business studies 2009 40 887 900 doi 10 1057 jibs 2009 22

domestic alliance networks and regional strategies of mnes a structural embeddedness perspective we draw on a social network perspective to explain multinational enterprises mnes propensity to distribute their operations unevenly across various regions of the world we focus on how the positioning of mnes in their domestic network of strategic alliances affects their geographic scope i e whether they concentrate on their home region or expand beyond it we theorize that embeddedness in alliance networks constitutes a double edged sword to the geographic scope of mnes strong embeddedness in domestic alliance networks drives the development of location bound firm specific advantages fsas which may narrow down mnes geographic scope in contrast moderate embeddedness leads to more non location bound fsas which reduce liability of foreignness and hence motivate mnes to widen their geographical scope we thus predict a non linear relationship between domestic alliance network embeddedness and mne geographic scope furthermore the impact of the domestic alliance network on mne geographic scope hinges on the organizational ability to efficiently and effectively absorb resources stemming from the network we test our hypotheses using fdi data from 302 us mnes in the information and communication technology industry for the period of 2001 2008 and generally find robust support for the hypothesized relationships

how national institutions influence technology policies and firms knowledge building strategies a study of fuel cell innovation across industrialized countries abstract the central thesis advanced in this study is that firms knowledge building strategies can be usefully explained by the variations in their national institutional contexts using an inductive approach a study of fuel cell innovation across the u s france japan and norway demonstrates how countries socio political institutions characterized by their levels of statism and corporatism contribute to variations in technology policies pertaining to investment collaboration internationalization and diversity these technology policies are sources of advantages and disadvantages for firms with implications for their knowledge building strategies the proposed theoretical framework is especially relevant in the context of industry emergence and r d internationalization

the influence of market demand upon innovation a critical review of some recent empirical studies abstract a number of recent empirical studies of technical change at the level of the individual firm have concluded that market demand is the dominant influence upon the innovation process calling forth innovations in market economies the pace of innovation in the private sector heavily influences the growth of national output and productivity and these studies and their conclusions have therefore received much attention having been extensively quoted in discussions of appropriate government policy for the encouragement of innovation this paper reviews a number of these studies and concludes that their findings and the interpretations of their findings in the secondary literature are seriously flawed and in many cases invalid the proposition that market demand governs the innovation process is by no means conclusively demonstrated in these studies and they are therefore inadequate and inappropriate guides for the formulation of policy most of the studies examined employ a working definition of demand factors which is so broad as to embrace a range of possible influences upon innovation which should more properly be classified elsewhere the concept of demand utilized in these studies bears little resemblance to the more restrictive and precise definition of market demand found in economics in addition the phenomena analyzed in these studies are a very heterogeneous lot the studies do not address identical empirical questions and their findings are as a result neither uniform nor unambiguous both demand and supply side influences are crucial to understanding the innovation process and it is the exclusive preoccupation with only one set of these forces which is criticized in this paper some implications of the criticism for government policy toward innovation are discussed in the conclusion

the globalisation of technology what remains of the product cycle model this paper reexamines two hypotheses associated with earlier versions of the product cycle model the first hypothesis that innovations are almost always located in the home country of the parent company is rejected on the basis of evidence drawn from one hundred years of u s patent office data the second hypothesis that the international dispersion of activity is led by technology leaders is historically valid however over the last twenty years technology leaders have been ahead instead in the globalization of technology that is in developing internal international networks to exploit the locationally differentiated potential of foreign centers of excellence c 1995 academic press inc copyright 1995 by oxford university press

seigniorage payments for use of the dollar 1977 1995 abstract i compute alternative seigniorage estimates for the us and relate them to total tax receipts and gdp the estimates indicate the proximate size of the prize coveted by emerging and transitional economies unable to provide their residents with stable national monies barro s 1982 conjecture that federal reserve payments to the treasury as percentage of corporate tax receipts would remain at early 1980s levels is examined also

transnational firms and the changing organisation of innovative activities it is suggested that a transition is taking place towards new modes of organising transnational corporations innovative activities first different units of multinational firms including foreign based subsidiaries are increasingly involved in the generation use and transmission of knowledge secondly multinationals are developing external networks of relationships with local counterparts through which foreign affiliates gain access to external knowledge sources and application abilities as a result of this evolutionary process multinationals organisation is subject to both centripetal and centrifugal forces considerable efforts are then necessary to innovate coordination procedures and mechanisms in order to enhance the generation circulation and use of knowledge a number of empirical works are reviewed providing some evidence of the evolutionary process discussed in the paper 1 transnational companies as networks of innovators economists have long viewed innovation as being primarily generated by firms in their home countries classic contributions in the economics of multinational corporations have consolidated this view referring mainly to the us based multinationals vernon 1966 kindleberger 1969 and stopford and wells 1972 theorised a quasi colonial relationship between the parent company and foreign subsidiaries wherein the latter are in charge of replicating the former s activities abroad with strategic decisions including r d and innovation strategies being rigidly centralised particularly vernon emphasised that coordinating international innovative activities would be too costly owing to the difficulties of collecting and controlling relevant information across national borders host countries and foreign subsidiaries would then play a role almost exclusively in the adoption and diffusion of centrally created technology this view was supported mainly by us economists and based on us evidence from the early post world war ii period but it was very influential for the development of studies on the economics of transnational companies tncs and the internationalisation of

what are the most promising conduits for foreign knowledge inflows innovation networks in the chinese pharmaceutical industry we study innovation networks in emerging markets where foreign actors have been identified as key sources of knowledge spillovers as well as progenitors of industry clusters focusing on connectivity as a channel for international knowledge sourcing we widen our lens beyond mnes to include critical innovative actors such as research institutions i e universities and research centers we examine the geographic dispersion of co inventor networks generated by us patents associated with the chinese pharmaceutical industry previous research has highlighted the role of organizationally driven mne networks as enablers of foreign knowledge inflows to less developed countries however our results emphasize the critical role of individually motivated networks arising from advanced economy research institutions in connecting china to global knowledge networks

new concepts and trends in international r d organization abstract the globalization of markets the regionalization of technical and scientific expertise and the rapid change in technologies are forcing technology based companies to continuously adjust their r d organization our study of 33 companies reveals five different types of r d organization in multinational companies mnc we classified r d organizations according to the dispersion of r d activities and the degree of cooperation between individual r d units and identified the ethnocentric centralized the geocentric centralized the polycentric decentralized the r d hub and the integrated r d network organization five trends of organizational change among these forms of international r d organization were identified 1 stronger orientation of r d activities towards international markets and knowledge centers 2 establishment of tightly coordinated listening posts 3 strengthening and reinforcement of foreign r d sites 4 increased integration of decentralized r d units and 5 tighter coordination and recentralization of r d activities at fewer know how centers the search for the optimal balance between coordination and control is reflected by hybrid structures and intermediary configurations detected in some of the investigated companies since effective changes in behavioral orientation require considerable time successful quantum leaps in multinational r d organization are next to impossible

mutual productivity spillovers between foreign and local firms in china the existing literature treats advanced technology sourcing as the only cause of reverse productivity spillovers from local to foreign firms and implies that mutual spillovers between foreign and local firms can only happen in the developed world this paper argues that the diffusion of indigenous technology and local knowledge helps the productivity enhancement of multinationals so that there can be mutual spillovers even in a developing country the results from a large sample firm level econometric analysis and a comparative case study of seven companies in chinese manufacturing support this new argument as mutual spillovers are identified between local chinese firms and overseas chinese or oecd invested firms

foreign direct investment in industrial research in the pharmaceutical and electronics industries results from a survey of multinational firms abstract this paper examines motives location characteristics inter temporal characteristics and modes of entry for foreign direct investment fdi in research and development r d the paper is based on a detailed empirical survey of laboratory sites established by 32 large multinational companies domiciled in 5 countries findings indicate that fdi in r d has risen considerably over the last 40 years and that firms invest in r d sites abroad in order to augment their knowledge base or in order to exploit it the former motive leads to establishment of facilities primarily close to universities while the latter type leads to establishment of facilities close to existing manufacturing facilities and markets the paper also finds that greenfield investments are the dominant mode of entry and that firms establish multiple r d sites in their home countries before investing in such sites abroad

formalizing internationalization in the eclectic paradigm the paper presents a simple general equilibrium model that formalizes internationalization in the eclectic paradigm based on a reconfiguration of concepts taken from the new classical economics literature the model enables us to address simultaneously the role of ownership location and internalization advantages and their interaction in the emergence of the multinational enterprise mne through a set of mathematical inequalities our model offers a bridge between the detached perceptions of the mne often held by international trade economists and international business scholars and makes specific aspects of the eclectic paradigm empirically testable

the impact of technological innovation on international trade patterns the evidence reconsidered abstract this paper presents some new evidence in relation to the role of technical change in particular industrial innovation on the international competitiveness of the various oecd countries its originality consists primarily of a using a technology output indicator to measure technological performance b presenting and comparing various measures of trade and technological performance for each individual oecd country with the exception of iceland c analysing at a relatively high level of product industry disaggregation the relationship between export performance and technological performance at the same time the very limited scope of the paper has to be emphasized a the analysis is purely static all the evidence presented relates to one year 1977 b most of the results obtained are preliminary and should be further substantiated by more detailed empirical and theoretical research c as a consequence little attention has been paid to policy implications which it was felt could only be discussed properly in a later stage the paper consists of four sections a brief review of the state of the art section 1 a discussion on definitions of technology intensity section 2 the development of the best technology output indicator section 3 and the empirical analysis itself section 4 the following most important results emerge from these various sections a there are serious shortcomings in using average technology intensity as bench mark for classifying products or industries in technology intensive or nontechnology intensive categories b there is a substantial difference between technology intensity as measured on the basis of a technology input proxy rd c yet as between countries the most traditional output and input indicators the number of patents granted and the amount spent on rd d foreign patenting in particular foreign patenting in the united states figs 1 and 2 section 3 is a more reliable technology output proxy than domestic patenting e in terms of technological comparative advantage as opposed to technology intensity it is the small oecd countries as opposed to the large ones which seem to base their trade comparative advantage on technological comparative performance table 7 section 4 1 f at the individual industry level it is found that i for most technology intensive industries defined however in a less restrictive way than us r d intensities a close relation exists between technological performance and export performance and ii that as compared to other country specific resource variables technological performance is the most important trade explanatory variable its elasticity increasing with the technology intensity of industries tables 11 and 12 section 4 2 space constraints prevented us from presenting the data in relation to the inter industry and inter country analysis these can however be obtained from the author

the drivers of foreign direct investment into research and development an empirical investigation this paper examines the determinants of foreign direct investment fdi in research and development laboratories by 32 multinational enterprises in the pharmaceutical and electronics industries the paper applies a dichotomous set of motives for fdi results from an econometric analysis of 136 laboratory investments show that relative market size and relative strength of a country s science base determine whether fdi in research and development is carried out in order to exploit existing firm specific advantages or in order to build up new firm specific advantages this holds true in similar form for japanese european and u s firms and across the two industries