Conclusion

This chapter summarizes the main arguments of the book and repeats the central empirical findings. Following a brief discussion of the data sources used to support the varied arguments, this chapter considers the lessons for theory and its strong comparative institutionalist perspective. Policy implications of the book are also considered in this chapter, and the link between institutional and policy reform and innovation outcomes is again emphasized. This chapter considers also the limitations of the book, and the ways the book’s arguments and analysis might be constructively challenged/amended in the future. There are a number of issues not explicitly addressed in the book because of its domestic institutionalist focus, including international treaties on intellectual property rights. The chapter concludes with some suggestions on how these future research agendas might be integrated with existing literature.

Multinational Enterprise, Innovation, and Development: Theoretical Perspectives

This chapter provides the theoretic background and working hypotheses for the empirical tests that follow in subsequent chapters. The book is informed by substantial literature in several academic subfields, including but not limited to international political economy, international business studies, development economics, and global value chain research. This chapter builds a cumulative theoretic framework for interpreting multinational innovation and comparative institutionalist perspectives. Prior literature and debate inform the hypotheses presented in this chapter, which involve both country and firm level attributes and resulting investment patterns. The chapter considers ideas from international development studies regarding the role of multinational firms in processes of country growth and technological upgrading, theories of the firm and contemporary pressures for polycentric innovation models, and institutionalist perspectives from political science and political economy. This chapter also provides working definitions for key concepts and how institutions might be analytically separated from host country policies. The chapter emphasizes the theoretic support for the causal mechanisms supposed in the various hypotheses.

Innovation-Intensive FDI and Host Country Institutions

This chapter moves beyond firm level attributes and economic motivations to consider the impact of host country institutions on investment models of multinationals in developing countries. It adopts a comparative institutionalist perspective, and utilizes country and firm level variables to measure governance. These measures are then employed to predict innovation outcomes. This chapter demonstrates that host country institutions affect the likelihood of local innovation taking place, and its intensity. A variety of measures of institutional coherence are developed, and address such diverse concepts as intellectual property protection, corruption, democracy, and bureaucratic quality. In addition, firm surveys are used to convey firm perceptions of institutional quality in host countries. The chapter includes a discussion of the literature on firm entry modes, and considers how other host country attributes, such as education and human capital, may influence innovation outcomes alongside institutions.

Introduction

This chapter situates the book in its theoretic and empirical contexts. It reveals the key observable motivation for the book; that multinationals are increasingly locating innovation in peripheral or developing economies. After briefly reviewing literature from political science, economics, and international business, the chapter summarizes the argument of the book: host country institutions, not only internal firm characteristics, are important determinants of innovation-intensive forms of international investment. The chapter contends that many existing political economy studies of foreign direct investment treat these flows as uniform, when in fact there is tremendous heterogeneity of investment models. Advancements in data collection allow deeper analysis of this heterogeneity than in decades past. The chapter provides background information on the different data sources used in the remainder of the book. The chapter also includes discussion of the implications of the argument for various academic disciplines, and draws attention to how multinationals are or are not embedded in local economies. The chapter concludes with a road map for the rest of the book.

Chasing the Tiger: Is Ireland’s Experience with FDI a Model for Developing Countries?

This chapter adds a case study of Ireland’s experience with FDI, as a complement to the cross-national investigations of preceding chapters. By considering a single country and its policies and institutions through time, this chapter adds context and policy relevance to the larger claims of the book. Ireland’s potential example for developing countries is considered, as well as its limitations. While Ireland has attracted a large amount of FDI since the 1990s, the country has not consistently exhibited innovation-intensive investment patterns. This chapter empirically examines the investment models adopted by firms in Ireland, and connects these strategies to the history of investment promotion and institutional development. This chapter demonstrates that institutions in Ireland did not until recently prioritize multinational embeddedness in the local economy, and that policymakers missed opportunities for innovation-intensive forms of investment. This chapter utilizes firm surveys, and also considers government support for innovation and domestic linkages. The chapter also contains a discussion of the possible implications of the Irish case.

The Determinants of Multinational Innovation in Emerging Economies

This chapter considers innovation outcomes among multinational firms in emerging economies. A variety of econometric tests are conducted, in which innovation is predicted by different firm and country level variables. Innovation is measured in different ways, from patenting activity to firm R&D spending levels. Various datasets are used in this chapter, including firm surveys and patent counts. This chapter tests a number of the hypotheses developed in chapter 2, using different modelling strategies. Statistical analysis is emphasized, however case studies also appear to illustrate the dynamics and mechanisms contained in the models. The firm identifies a number of firm and country characteristics that impact the innovation proclivity of multinational firms. The size of certain economic sectors within the host country, in particular the natural resource sector, also impacts the likelihood of multinational innovation.

Patterns of Innovation among Multinational Firms

This chapter chronicles the spread of innovation-intensive forms of foreign investment. It is primarily descriptive, and provides the empirical context for the econometric tests in subsequent chapters. The multifaceted concept of innovation is investigated in detail in this chapter. Historical patterns of multinational innovation are presented, followed by more recent empirical trends. The evolving sectoral distribution of FDI in developing countries is examined, as are the potential implications for innovative activities. The chapter extensively details patterns of multinational innovation, through firm surveys and aggregated country level data. Additionally, the extent of innovation spillovers and linkages with economic actors in host countries is considered. Among the core findings in this chapter are that innovation is becoming more common in developing countries, innovation is concentrated in specific regions, and service sector investment represents an increasing share of investment in emerging economies. Firms in some sectors are also more likely to embed in host economies than firms in other sectors.