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Multinational Corporations: On the relation between the complexity of the knowledge base and the geographical and functional structure of the business group

English title Multinational Corporations: On the relation between the complexity of the knowledge base and the geographical and functional structure of the business group
Applicant Gagliardi Luisa
Number 176445
Funding scheme Project funding (Div. I-III)
Research institution Département d'histoire économique ISTEC - SES Université de Genève
Institution of higher education University of Geneva - GE
Main discipline Economics
Start/End 01.09.2018 - 31.08.2022
Approved amount 608'345.00
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All Disciplines (2)

Science of management

Keywords (4)

Knowledge base; Multinational Corporations; Localisation and internalisation strategy; Geographical structure

Lay Summary (Italian)

Negli ultimi decenni si è assistito ad un radicale cambiamento nel ruolo e nella natura delle imprese multinazionali (MNEs). Non soltanto il flusso di investimenti esteri è cresciuto senza precedenti a livello globale, ma si sono modificate profondamente le modalità di comportamento strategico e organizzativo delle MNEs stesse.
Lay summary

Scopo e obiettivi del progetto
Il progetto di ricerca proposto si pone l’obiettivo di analizzare le strategie organizzative delle imprese multinazionali (MNEs) a fronte della progressiva transizione verso vantaggi di ownership di natura technology-based. A tal fine, il progetto si riconnette alla letteratura di international business nel definire i vantaggi di ownership delle MNEs in funzione della loro base tecnologica (e.g. Cantwell, 1989). D’altra parte, si ricollega alla letteratura emergente in organisational economics nell’analizzare le MNEs in termini di knowledge hierarchy, partendo dall’assunzione che la struttura geografica e funzionale dei gruppi multinazionali rifletta oggigiorno la complessità della loro base tecnologica (Garicano, 2000; Caliendo and Rossi-Hansberg, 2012).

Contesto socio-scientifico 
Il contributo innovativo del progetto sul versante scientifico è da valutare alla luce della letteratura esistente sulle MNEs che offre a tutt’oggi interpretazioni poco esaustive sul rapporto tra base tecnologica e comportamento organizzativo d’impresa. In termini di più ampie implicazioni manageriali e di policy, il progetto enfatizza il trade-off tra scelte di localizzazione e di internalizzazione produttiva e contribuisce a gettare nuova luce sulle opportunità connesse alla frammentazione geografica e funzionale della catena del valore.

 Parole chiave
Base tecnologica, imprese multinazionali, strategie di localizzazione e internalizzazione, struttura geografica

Direct link to Lay Summary Last update: 15.06.2018

Responsible applicant and co-applicants


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Multinational Enterprises (MNEs) are nowadays considered the largest source of innovation and technology generation, transfer and diffusion. They possess more advanced technological capabilities due to their access to superior knowledge (e.g. Caves, 1974; Dunning, 1980; Cantwell, 1989), which they exploit and nurture through the functional and geographical fragmentation of their value chain (Baldwin and Clark, 2000; Sturgeon, 2000; Aarland, Davis, Henderson, and Ono, 2007). As most of existing MNEs have their competitive edge in this distinctive set of technological assets, the last decades have seen a progressive shift towards a focus on technology-based ownership advantages, rather than overall absolute cost advantages in production, as key driver of their organizational strategy (Fladmoe-Lindquist, 1992; Tallmann and Fladmoe-Lindquist, 2002). Yet, and despite the important implications linked to this change, the research in this context is still underdeveloped. In fact, whereas previous contributions have provided interesting insights on the relation between the knowledge base of the MNE and its functional configuration (e.g. Bloom et al, 2009; Tag, 2013; Puga and Trefler. 2014), the heterogeneous behaviour of MNEs endowed with different knowledge bases with respect to the way in which they organize spatially their production activities remains understudied in economics relative to sociology and management (e.g. Sorenson, 2005). In addition, rarely both dimensions have been taken together, notably due to the lack of data providing information on both ownership links and the geographical structure of MNE networks, meaning that no existing studies so far have been able to provide a comprehensive analysis on the overall structure and organization of MNEs as a whole, especially in the light of their knowledge base.This project seeks to advance knowledge in the field, from both a theoretical and an empirical perspective, by analysing the organizational behaviour of MNEs, in terms of both functional and geographical structure of their business group, in the light of the progressive shift towards technology-based ownership advantages. To this scope, we draw from the international business literature in qualifying modern MNEs’ ownership advantages as a mean of the possession of superior knowledge (such as firm-specific intangible assets and technologies). Departing from this background, the project intends to develop a model that incorporates the notion of MNEs as knowledge-based hierarchies (Garicano, 2000; Garicano and Hubbard, 2007; Caliendo and Rossi-Hansberg, 2012) into an economic geography proximity-concentration framework close to Duranton and Puga (2005), Davis and Henderson (2008) and Duranton Storper (2008). The model will allow to theoretically derive a set of testable hypotheses on the implications of different business groups’ internal knowledge organisations for corporate strategic choices in terms of international expansion. Then, and consistently with its theoretical framework, this project aims at exploring empirically the correlation between differences in the knowledge-base (in terms of both “depth” - or amount of knowledge assets possessed by the business group - and “breath” - as signalled by the technology space in which the MNE operates) and in the structure of business groups, with particular regard to their geographical and functional configuration. In doing so, it takes advantage from novel restricted access data on business groups to develop a detailed taxonomy of MNEs types. Last but not least, this project pays special attention to the causal examination of the link between the characteristics of the knowledge-base of the MNE and the evolution in its organizational structure with particular emphasis on the internal geography of the business group. This aspect has remained largely underexplored in existing studies and it represents one of the most fruitful area of research in terms of both academic contribution to the state of art in the field, and broader impact.