The purpose of this paper is to identify major developments in corporate innovation. The author focuses on the behavioral differences between MNEs from developed and emerging markets in the way they locate their R&D activities.
With the help of descriptive statistics, the paper identifies major trends in the global distribution of innovative activity. The novel source of patent statistics, Patent Cooperation Treaty (PCT) applications, is used as a proxy for innovative effort by leading MNEs. This paper is among the first attempts to analyze the global geography of innovation based on PCT statistics.
The analysis underscores differences in the patenting activities of MNEs from emerging and advanced markets. It confirms that innovative activity by major MNEs remains largely home-based, which contradicts the premise of the global nature of corporate innovation. At the same time, the growing importance of China as a research center attracts MNEs from a variety of developed markets. Emerging MNEs also file patent applications domestically. Most Chinese R&D subsidiaries of MNEs from advanced economies in our sample do not pursue technological specialization, as they produce patents in the same technological areas as the corporate headquarters or other subsidiaries.
A number of assumptions about the innovation geography of major MNEs were empirically tested. An attempt was made to fill the gaps in our understanding of innovation strategies pursued by MNEs in emerging markets. The author uses the concept of MNEs as meta-integrators to explain the observed dynamics. Its explanatory power is more convincing as applied to our data than the concept of national systems of innovation.
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