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Multinational firms in (global) cities: mimicry, knowledge networks, and economic growth

Benoit, Florence (2021) Multinational firms in (global) cities: mimicry, knowledge networks, and economic growth. Advisor: Belderbos, Prof. René. Coadvisor: Riccaboni, Prof. Massimo . pp. 306. [IMT PhD Thesis]

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This dissertation examines the dynamic interrelationship between MNEs and cities. First, it examines cities as MNEs’ foreign direct investment location choice and imitation processes within these FDI location choices. Imitation not only enhances the attractiveness of the city by contributing to the generation of agglomeration economies and by encouraging additional imitation, but it also contributes to the further development of the international connectivity of the city and the creation of global knowledge networks. Second, this dissertation introduces a new measure of international connectivity of cities in terms of collaboration on innovation. In addition, it elaborates on the interrelated roles of different types of international connectivity on city economic growth and the influence of this connectivity on the surrounding areas of the city. The dissertation has four contributing chapters, in addition to an introduction (Chapter 1) and general conclusion (Chapter 6). Chapter 2 examines the role of domestic cultural characteristics and investor heterogeneity in shaping imitation of foreign direct investment location choices by MNEs. While existing research has indicated that firms may imitate their peers in order to gain legitimacy among stakeholders, a national cultural dimension has rarely been included. The chapter argues that imitation processes depend on the presence of three cultural traits of home countries, i.e. collectivism, power distance and uncertainty avoidance, which can jointly act as domestic conformity forces strengthening the incentive to imitate. This influence is most salient in particular for firms that lack substantial domestic legitimacy and those that have limited multinational operations. The empirical findings, using a conditional logit model on a sample of 1050 greenfield manufacturing investments in the United States by 662 firms based in 35 different home countries, confirm that the tendency to engage in imitation is stronger for firms based in home countries characterized by greater collectivism and overall national conformity forces. Furthermore, the empirical findings conclude that less legitimate firms and firms with limited multinational operations are significantly responsive to two domestic cultural traits, i.e. collectivism and power distance. This may imply that targeted policies in attracting FDI from countries with such domestic conformity forces may prove to be more effective by follow up investments, yet it will attract in particular smaller and younger firms and firms with limited multinational operations. Chapter 3 puts forward a new measurement of international connectivity of global cities focusing on collaborations in innovation, by drawing on a novel and extensive database of geocoded patent inventor addresses. While existing research has mainly measured international connectivity by the worldwide office networks of advanced producer services firms (e.g. consulting, accounting and insurance firms) in cities, a more inclusive understanding of city connectivity remains absent. Hence, this chapter looks at international connectivity based on another central function of global cities, i.e. their role as prominent spaces for knowledge exchange and collaboration on innovation. The findings of this chapter, focusing on the 125 cities in 46 countries, confirm the role of global cities as prominent places for knowledge exchange and collaboration of innovation and the growing importance of international collaboration for innovation. Chapter 4 compares the new measure of connectivity based on innovation collaboration to the traditional indicator on advanced producer services for 129 cities in 76 countries. The findings suggest broadly similar trends, but also highlight some important differences suggesting specialization advantages of a strong position in one of the two networks. When analyzing the simultaneous and interrelated influences of the knowledge network and the advanced producer services network of cities on their economic growth using a fixed effects panel regression, the findings suggest that both aspects of cities’ international connectivity may allow their economies to grow, but that they reduce each other’s association with city economic growth. This suggest that specialization in one type of network and connectivity and building on existing strengths may be more beneficial. Chapter 5 analyses the influence of global city international connectivity on collaborative linkages of the city with the surrounding area of these global cities. It argues that the international connectivity may render global cities less likely to establish intensive local innovation linkages with surrounding areas, but that the nature of this relationship may depend on the characteristics of the global city and their surroundings. More specifically, we argue that global linkages are more detrimental to the establishment of local linkages if the global city is a technology leader, but less so if the surrounding area has a greater absorptive capacity and features a smaller travel distance to the global city. The findings, based on the collaborative linkages of 21 US global cities and 614 surrounding counties using a fixed effects Poisson regression model, provide clear indications of international connectedness being associated with local disconnectedness. However, it also suggests that the relationship between global city international connectivity and their local linkages depends on the characteristics of both the global city and their surrounding area. This illustrates that knowledge exchange does not always cause an equal spread of opportunities across geographies and calls for innovation policies focusing on improving the knowledge convergence between the surrounding areas and cities.​

Item Type: IMT PhD Thesis
Subjects: H Social Sciences > HB Economic Theory
PhD Course: Economics, Networks and Business Analytics
Identification Number: 10.13118/imtlucca/e-theses/341
NBN Number: urn:nbn:it:imtlucca-27955
Date Deposited: 06 Dec 2021 10:53
URI: http://e-theses.imtlucca.it/id/eprint/341

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