Grazia Ietto-Gillies

Does Multinationality Affect the Propensity to Innovate? An Analysis of the Third UK Community Innovation Survey

Abstract The paper is developed at the interface between internationalization and innovation studies. It utilizes data on innovation from the UK Community Innovation Surveys 3 and 2 (CIS3 and CIS2) to assess whether multinationality affects the innovation propensity of surveyed enterprises. The indicators of innovation propensity—our dependent variables—are taken from the following CIS sets of variables: innovation outputs; innovation inputs; innovation outcomes (patent applications); innovation continuity/sustainability. The latter element is considered to be the ability of the enterprise to sustain innovation over a long period of time and the relevant variable is derived from both CIS3 and 2 data. This allows the paper to introduce dynamic elements into the analysis. Four hypotheses are developed and tested. Our main hypothesis states that multinationality per se (i.e. being part of a multinational company network) affects the propensity to innovate. We also test for three sub‐hypotheses related to characteristics of multinationality: belonging to a group vs being independent; degree of multinationality; being part of a foreign vs domestic multinational. The results show that all those CIS enterprises that belong to a multinational corporation—whether UK or foreign—are more likely to exhibit innovation propensity; they are also more likely to engage in innovation activities on a continuous basis.

Multinationality Matters in Innovation: The Case of the UK Financial Services

The paper starts with a brief summary of theoretical perspectives on the relationship between multinationality and innovation and the move from a centralized and hierarchical perspective to a more decentralized network‐based one. Four hypotheses are set up to test the relationship between multinationality and innovation, using data from the Community Innovation Survey 12 for the financial services sector. All models control for the size of the enterprise. The results show that multinationality is positively related to innovation activities. The positive impact of being part of a multinational company (MNC) on the propensity to innovate seems largely due to the fact that MNCs operate in different countries rather than, or more than, to the enterprise being part of a group. The relevance of multinationality appears to be higher, the higher the degree of internationalization of the company of which the enterprise is part. The country of origin of the company appears also to be important.

Theories of international production: a critical perspective

Purpose – The purpose of this paper is to analyse the role that the nation‐state plays in influencing the behaviour of the transnational companies (TNCs) and how it affects ones view of TNCs as efficiency‐ versus strategy‐driven institutions.Design/methodology/approach – The paper starts with a brief historical analysis of the main theories of international production and the TNCs, to which it then relates the role of the nation‐state and of strategic approaches.Findings – The characteristics of the nation‐states that affect the behaviour of TNCs are linked to their regulatory regimes regarding fiscal, currency and social security regulations. These create opportunities for advantages of operating across frontiers and thus for specific strategic behaviour towards labour and governments.Research limitations/implications – The theoretical approach presented will need to be supported by empirical findings.Practical implications – There are policy implications specifically related to the fact that multinatio...

Some indicators of multinational domination of national economies: analysis for the UK and other developed countries

The paper starts by giving an overview of the foreign direct investment position, relative to the size of the domestic economy, for major developed western economies. It then develops the view that, in assessing the full impact of foreign direct investment on national economies, a global approach should be considered: such approach stresses the relevance of multinational spread of activities and the need to consider the cumulative effect of both outward and inward direct investment. This leads to the introduction of a ‘multinational domination ratio’ for national economies and to estimates of it for some main industrialized western economies over a 20-year period. A first attempt to use this global approach in order to assess the possible impact of UK foreign direct investment (both inward and outward) on trade leads to the computation of elasticities of trade with respect to foreign direct investment.

On quasi-markets and privatizations in public services

The British National Health Service (NHS) is this year celebrating its 60th birthday. For the first 25 to 30 years of its life it had a reputation as one of the best health systems in the world, both in terms of services to the patient and efficient use of resources. It was loosely based on three main principles/aims: comprehensiveness, universality and equity. The integration of the system was the key element in achieving the aims. In fact, comprehensiveness – the delivery of care at all stages, ages and levels required – cannot be achieved unless the system is integrated. Universality means that care was offered to everybody and at all stages of their life; equity meant that care would be offered according to need and independently of ability to pay or location of the patient. These three principles were never entirely operational; equity, in particular, was never fully implemented: there were, and still are, great disparities in the ability to access or utilize care according to the geographical location or social position of patients.1 The last 20 years have seen great debates and attempts at reforms of the system by both Conservative and Labour governments. It is a sign of the NHS’s popularity that, even while proposing sweeping changes, the various governments all claim that the NHS will continue to operate and is safe in their hands. Nonetheless, some critics are now beginning to wonder whether, at its grand age, the NHS is going to be gradually pushed into retirement and be replaced by a more market-led system. The book under review comes at a key point in the life of the NHS and is written by an author who had a role in the strategic directions taken by the UK health care system as ‘senior policy adviser to the prime minister at 10 Downing Street’ (p. 2). The competence of the author in the subject emerges throughout this clearly structured and well-written book, making it a pleasure to read for anybody interested in the fate of the NHS whether the reader is critical or in agreement. The next two sections of this review article summarize the book’s content; sections four and five give a critical assessment and the last section concludes.

The Role of Internationalization as a Determinant of Innovation Performance: An Analysis of 42 Countries

This paper analyses the impact of internationalization on the innovation performance of 42 countries. Innovation performance – the dependent variable – is measured by the number of triad patents and PCT applications that originate from a country. The following internationalization variables – independent variables – are used: inward and outward stock of FDI, exports and imports as well as the number of parent companies in a country. Information on patents and the internationalization variables, together with further explanatory variables, including the number of scientific articles and of Internet users in a country, are collected for the years 1990 to 2008. The analysis is done for all countries together and then for two groups of countries clustered on the basis of their GDP per capita. The paper finds support for a positive impact of internationalization on countries’ innovation performance. Our analyses suggest that competing in international markets via outward FDI and exports increases the scope of learning and the need to innovate. We find evidence of a negative relationship between patenting and inward FDI as well as imports.

The Widening Geography of UK International Production: theoretical analysis and empirical evidence

The paper starts by defining widening and deepening patterns of international production. In a widening pattern companies and countries increase their internationalisation by spreading out their activities in more and more countries. In a deepening one they become more involved in ‘approximately’ the same countries in which they have already operated. An analysis of the a priori reasons why we might expect a widening trend, as well as the possible reasons for deepening trends, follows. The results of empirical micro- and macro-studies are then presented. The empirical work considers first the changes in the geographical network of affiliates of the UK largest TNCs in the last 30 years. This is followed by a study of the macro-network in relation to the location of UK outward FDI. Both sets of results support the hypothesis of a widening geographical trend. Some conclusions are drawn on the possible implications for strategies at the level of companies, labour organisations and governments.

Clinton and Blair: The Political Economy of the Third Way

The Clinton administration in the USA and the Blair government in the UK have often been identified in a variety of literatures as Third Way governance. It is not clear whether and to what extent the identification refers to the economics or politics or both aspects. Neither is it fully clear whether the ‘‘Third’’ aspect refers to the positioning between a planned versus a capitalist economy or between the Keynesian post-World War II consensus and the neo-liberal surge of the Reagan and Thatcher eras. Most commentators—including the author of this book—position the Third Way in the latter category: a new way between Keynesianism and Thatcherism. As regards the first aspect, Romano identifies the Third Way largely with economics and he interprets evidence on it to suggest that ‘‘politics drives economics’’ (p. 120). The book sees two main elements in the Third Way economic strategy: (a) endogenous growth driven by investment in physical and human infrastructure; and (b) fiscal discipline. Following an introduction, the next two chapters present the theoretical underpinning of these two elements. These are the best chapters in the book because they offer a clear, comprehensive yet succinct exposition of the main theories in their historical contexts. On growth we are presented with: the evolutionary theory and its Schumpeterian underpinning; the neoclassical Solow growth model; and the endogenous growth theory. Regarding the latter, the role of education and of investment in Research and Development (R&D) in strengthening National Innovation Systems is emphasized. On the public finance side chapter three presents the neoclassical theory and its ‘‘imperfectionist’’ twists. The relationship between the two chapters and related sets of theories is presented in terms of REVIEW OF SOCIAL ECONOMY, VOL. LXVIII, NO. 3, SEPTEMBER 2010

The Characteristics, Performance and Strategic Behaviour of Merged Versus Non-Merged Establishments in Britain

The paper compares the structural characteristics, market conditions, organizational features, strategic behaviour and performance of merged versus non-merged private business establishments in Britain. The results are based on the analysis of the 1990 Workplace Industrial Relations Survey. The following conclusions are reached: merged establishments tend to be rather old, of small to medium size, more likely to be foreign-owned and to be involved in manufacturing. Compared to non-merged establishments they are likely to operate in international and oligopolistic markets, in multi-products and in conglomerate businesses. The merged manufacturing establishments are more likely to have been involved in restructuring strategies and to have cut jobs and achieved productivity gains. More merged establishments declare a below-average financial performance.