The Local/Global Integration of MNC subsidiaries and their Technological Behaviour: Argentina in the Late 1990s

ANABEL MARIN; MARTIN BELL

Suiza

Conferencia; 32nd EIBA Annual Conference; 2007

Universite de Fribourg

This paper examines reasons for differences in the innovative activity of MNC subsidiaries in the context of a late industrialising host economy, Argentina, in the late 1990s. It builds on our earlier work which demonstrated that local spillovers from FDI did arise, but not as a generalised consequence of all kinds of FDI-mediated technology transfer from parent companies. Instead spillovers were associated with the existence of significant knowledge-creation and related innovative activity undertaken by the local subsidiaries themselves. That local technological behaviour varied widely between subsidiaries. We have provisionally explored reasons for this variability, highlighting the possible significance of location-specific factors. In this paper we examine the importance of the subsidiaries’ functional integration within (a) their global corporations and (b) the host economy. The results show that functional integration into the local economy is on its own associated with low levels of local innovative activity. In contrast, close corporate integration has positive effects on local innovative activity; in particular, when subsidiaries are also functionally integrated into the local economy.