In the information-based, knowledge-intensive economy of the twenty-first century, MNEs are not competing only on the basis of their traditional ability to access new markets and arbitrage factor costs. Today the challenge is to build transnational organizations that can sense an emerging consumer trend in one country, link it to a new technology or capability it has in another, develop a creative new product or service in a third, and then diffuse that innovation rapidly around the world. This transnational innovation process is much more sophisticated than the more traditional “center-for-global” and “local-to-local” approaches that have been the dominant form of cross-border innovation in the past. In this chapter, we describe the traditional and the emerging models of cross-border innovation as well as the nature of the organizational capabilities that must be developed to make them effective. The chapter concludes with a closer examination of the characteristics of the transnational organization that allows the MNE to develop and manage crossborder flows of human and intellectual capital supplement with the same facility it has traditionally managed its international flows of financial capital.
In Chapter 3 we described how MNEs competing in today's global competitive environment are required to build layers of competitive advantage – the ability to capture global-scale efficiencies, local market responsiveness, and worldwide learning capability. As many of these companies found ways to match one another in the more familiar attributes of global-scale efficiency and local responsiveness, they had to find new ways to gain competitive advantage. In this process, competitive battles among leading-edge MNEs (particularly those in knowledge-intensive industries such as telecommunications, biotechnology, pharmaceuticals, etc.) have shifted to their ability to link and leverage their worldwide resources and capabilities to develop and diffuse innovation.
The trend is reflected in the fact that R…D expenditure globally more than doubled in real terms between 1992 and 2010. Unsurprisingly, worldwide patent applications grew from 922,000 in 1985 to almost 2million in 2010. In the same period, trademark applications also increased world wide from about 1million in 1985 to 3.6million in 2010.
Review the options below to login to check your access.
Log in with your Cambridge Aspire website account to check access.
There are no purchase options available for this title.
If you believe you should have access to this content, please contact your institutional librarian or consult our FAQ page for further information about accessing our content.