The links between international production and innovation: a double network approach

This paper examines the changing role of multinationals in the global generation, adoption and transfer of innovation. It is argued that the combination of traditional asset exploiting objectives with increasing asset seeking activities entails a transition of multinationals towards a double network structure. On the one hand multinationals are more and more characterised by the interconnection of a large number of internal units that are deeply involved in the company’s use, generation and absorption of knowledge. On the other hand, units belonging to the internal network tend to develop external networks with other firms and institutions that are located outside the boundaries of the multinational firm, in order to increase the potential for use, generation and absorption of knowledge. Extending the analysis to a more general level, it is suggested that each of the external actors with which multinationals are interconnected across countries are themselves involved in extensive webs of relationships with other firms and institutions. By becoming embedded in different local contexts, multinational firms act as bridging institutions connecting a number of geographically dispersed economic and innovation systems. As a result, they are conditioned by, and contribute to, the evolution of different contexts in which they operate.