Discuss the role of multinationals in the globalisation of innovation Essay

Discuss the role of multinationals in the globalisation of innovation - Essay Example With such economic power, the dominance of multinationals as leaders in technological innovation and this can be seen by the fact that 98% of the expenditure on Research and Development (R&D) by the 700 top R&D spenders, is done by the multinationals (Castellani and Zanfei 2005); the magnitude of the statistics can be fully comprehended when we see that the R&D expenditure of few major multinationals is more than the expenditure of some countries. This paper will attempt to show the positive role multinationals have played in the globalization of innovation with more focus on the emerging economies. Section 1 of the paper will deal with how innovation activities take place in a multinational. Section 2 looks over the research conducted by Jasjit Singh in his paper ‘Multinational Firms and International Knowledge Diffusion: Evidence using Patent Citation Data†. ... a positive light, as companies that bring in much needed technology and technical support that allows the host country’s’ citizen to able to improve their standard of living. Section 4 of the paper deals how technological innovations have also caused a dramatic rise in international trade especially in sectors which have close link to technology. In the conclusion we sum up the arguments of how multinationals have caused innovations, moreover, many of these innovations are not just technological but also supply chain process. Section 1 Innovations carried out by Multinationals fall under the second category of global generation of innovation. Since these companies operate on such large scales they usually have their own internal innovative network units based in different host countries as well as the home country. One of the many reasons for this is that, it allows the company not only to effectively and efficiently provide innovative ideas to the subsidiary unit but a lso it allows the main unit to understand the practical application process of these strategies on the local market of the host country and impart the reason for success or failure of a subsidiary to the other units. The three main strategies many multinationals use to organize their internal innovative system as stated by Archibugi and Iammarino. Centre-for-global This strategy is more commonly known in the business world as the â€Å"octopus view† of the multinational organization. As the word octopus suggest. The head of the octopus symbolizes the headquarters of the company where the entire R&D takes place. It is also the place where the top management is located thus the entire strategic planning and ideas takes place here too. It distributes its technical expertise and plans to the subsidiary