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The sources of innovation: Global networks versus local specialization

12 March 2020 at 11:30 AM - 1:00 PM

Room 205b, Campus on Viale Romania, 32

Speaker: Andrea Ascani, Utrecht University


A large academic consensus exists on the idea that successful innovative processes are geographically bounded within regions, where persistent and dense interactions between co-located organisations stimulate economic specialization, learning and the development of new competences. Nevertheless, the ability of regional economies to capture, understand, absorb and re-use external knowledge is also regarded as a fundamental element to sustain and refine the local profile of specialisation and competitiveness. The present article combines these views to investigate the sources of the regional innovation process, by considering local multinational enterprises as regional knowledge gatekeepers and their set of foreign subsidiaries as the regional external network through which new knowledge can be sourced. We generate a dataset for Italian regional economies over the period 2007-2012, by considering EPO data on the specific IPC technology classes in which regional patents are filed and connecting these classes to both the manufacturing sectors in which regions are specialised and to the sectors of the foreign subsidiaries of local parent companies. After controlling for endogeneity issues, our results suggest that both the internal and external sources of knowledge can generate indigenous innovation, but the role of the external networks vary substantially according to the local profile of economic specialisation as well as network density, geographical spread and the specific location of the subsidiaries. Our findings, hence, support a view of regional innovation as an interactive process whereby valuable knowledge resources are not only generated within the reach of the local economy, but they are also integrated with external inputs. This contrasts with recent anti-globalisation views according to which the increase in the foreign operations of national companies impoverishes the local economy.