Does innovation lead to global orientation? Empirical evidence from a sample of Italian firms

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Abstract

This paper analyses the relationship between innovation at firm and industry level, and the global vs regional strategy of multinational enterprises (MNEs). Based on data from a sample of large Italian manufacturing firms, the analysis shows that technological assets affect a firm s ability to overcome the liability of (regional) foreignness: the extent to which MNEs can exploit their firm-specific technological advantages is greater within their home region, but they also exploit them outside it. Furthermore, the results show that a firm s foreign (outside the home country) and global sales (outside the home region) are higher, the greater the technology intensity of the industry in which they operate. These findings suggest that, although MNEs tend to operate regionally rather than globally, their strategic orientation is contingent upon firm- and industry-specific factors. Managers need to take the potential for globally exploiting R&D investments into account, even if it may not be equally successful within and outside the home region, and may be constrained by a number of inter-regional barriers.
Original languageEnglish
Pages (from-to)305-315
Number of pages11
JournalEuropean Management Journal
Volume2009
Publication statusPublished - 2009

Keywords

  • Global Strategy
  • Innovation
  • Italy
  • Multinational enterprise
  • Regional Strategy
  • firm-specific advantage

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