Reveals that, despite the rapid growth of Malaysia and other South‐East Asian economies, very little is known about innovation in the region. Using Malaysia as an example, the evidence shows that technological and organizational innovation at the local transnational corporation (TNC) plant level has played a major part in Malaysia’s export success. Based on recent field research, assesses the nature, focus and extent of innovation within the TNCs’ subsidiaries. Uses a simple model to situate subsidiary innovation within the context of global TNC strategies, and raises key questions concerning the European Union and, in particular, the UK, which now relies heavily on TNCs’ investments for its industrial future.
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