Intangible Assets, Multinational Enterprises and Regional Innovation ...

Intangible Assets, Multinational Enterprises and Regional Innovation in Europe Jan-Philipp Kramer & Javier Revilla Diez Leibniz University Hannover Elisabetta Marinelli & Simona Iammarino SPRU/University of Sussex 04/2009 IAREG Working Paper WP1/4

The research leading to these results has received funding from the European Community's Seventh Framework Programme (FP7/2007-2013) under grant agreement n° 216813

IAREG – Intangible Assets, Multinational Enterprises and Regional Innovation in Europe

Intangible Assets, Multinational Enterprises and Regional Innovation in Europe Jan-Philipp Kramera & Javier Revilla Diez (Leibniz University Hannover), Elisabetta Marinelli & Simona Iammarino (SPRU, University of Sussex) a

Corresponding author: Leibniz University Hannover1 Institute of Economic and Cultural Geography Schneiderberg 50, 30163 Hannover, Germany Email: [email protected]

Abstract This paper provides qualitative insights on the key channels through which intangible assets are enhanced in MNEs innovation processes, and describes their spatial roots and impacts. The focus is specifically on three intangibles, namely human, organisational and network capital, which have been shown by the literature to be crucial both to MNEs activities and to regional knowledge creation and spillovers. The research has been based on over forty in-depth interviews to senior managerial and technical staff of flagship MNEs of the Automotive, Life Science and ICT sector from both Germany and the United Kingdom. By focussing on the processes through which investment in IAs occurs and the structures that support those processes within the firm and the regional environment, some of the key dimensions through which the three IAs are enhanced and contribute to the embeddedness of MNEs in regional innovation systems are identified. Keywords Intangible assets, Multinational Enterprises, Innovation Strategies, Regional Innovation Systems, Europe JEL Classification F23, L14, L22, O31, O32, R11.

1

The authors would like to thank Daniel Schiller for his valuable comments and inputs to this paper and the interviewees for spending their precious time in answering our questions.

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1

INTRODUCTION .................................................................................................. 4

2

INNOVATION IN MNES AND REGIONS: THE ROLE OF HUMAN, ORGANISATIONAL AND NETWORK CAPITAL .......................................... 6 2.1 2.2 2.3

3

METHODOLOGY, DATA COLLECTION AND FRAMEWORK FOR ANALYSIS ............................................................................................................ 11 3.1 3.2 3.3

4

RESEARCH DESIGN AND INTERVIEW GUIDES .................................... 12 FIRMS SELECTION CRITERIA .................................................................. 14 FRAMEWORK FOR ANALYSIS AND CODIFICATION OF THE INTERVIEWS ................................................................................................ 15

CASE STUDY RESULTS .................................................................................... 18 4.1 4.2 4.3

5

MICRO LEVEL INSIGHTS - INTANGIBLE ASSETS AND FIRMS ............ 6 MESO LEVEL INSIGHTS - INTANGIBLE ASSETS AND REGIONS ......... 8 MNES, REGIONS AND INTANGIBLE ASSETS ......................................... 10

HUMAN CAPITAL ....................................................................................... 21 ORGANISATIONAL CAPITAL ................................................................... 24 NETWORK CAPITAL .................................................................................. 31

CONCLUSIONS AND IMPLICATIONS FOR POLICY ................................ 39

REFERENCES ............................................................................................................. 44 APPENDIX ................................................................................................................... 50

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1

INTRODUCTION

Intangible assets (IAs) are increasingly seen as critical drivers for knowledge creation, innovation and consequently economic growth. These assets can be defined “all nonmaterial factors that contribute to the performance of firms in the production of goods or the provision of services, or that are expected to generate future economic benefits to the entities or individuals that control their deployment” (EUSTACE, 2000, p. 31). A burgeonic literature has developed in a relatively short time, trying to refine and apply such concepts effectively re-framing how micro, regional and national economic and innovative processes are to be interpreted (DI TOMMASO et al., 2004).

In this paper, we will contribute to the debate on intangibles in two ways: firstly, by defining and exploring the IAs that influence innovation processes in Multinational Enterprises (MNEs) and, secondly, by analysing the regional dimension of such IAs.

The reasons to adopt such an approach are manifold. On the one hand, the study of IAs at the regional level, which has been widely tackled in the literature of the geography of innovation, has been so far mostly theoretical with no uniform definition of regional or local intangibles. On the other, although intangibles at the firm level have received large scholarly attention in the fields of international business, accounting and economics, these approaches have mostly focused either on the general process of value creation (e.g. LEV, 2001; MALHOTRA, 2001; DAUM, 2003), or on the role of MNEs as main channels of knowledge generation and transfer (e.g. CHESNAIS, 1988; CANTWELL, 1989, 1994; FORS, 1998). Whilst the latter (very prolific) literature has emphasised the increasing internationalisation of R&D and innovation activities, it has left many open questions particularly as far as locational and regional issues are concerned. This is a significant gap as it is precisely through the technological efforts of MNEs that regions, in a globalizing economy, are linked with other locations over and beyond national boundaries (CANTWELL and IAMMARINO, 2003).2 As a consequence, whilst MNEs - as creators as well as vehicles of new knowledge - directly affect the stock of

2

This is particularly the case of areas interested by strong economic integration processes such as those occurring in the European Union.

4


intangible assets within a sub-national region, we are still short of concepts concerning the extent of corporate integration in spatial knowledge creation.

The focus of this paper is specifically on three IAs: human, organisational and network capital which, as explained in the literature review below, are crucial in supporting innovation both at the firm and the geographical level. As the concept of IAs is surrounded by a large ambiguity, due to the variety of approaches adopted, narrowing the analysis to these three assets has been a necessary and non-trivial step to frame the research. Building on previous seminal contributions, we define the three concepts at the MNE and regional level. Subsequently, based on over forty interviews to senior managerial and technical staff of leading MNEs, we identify the dimensions in which these IAs are enhanced at the micro level (within the firm) and the mechanisms through which they interact with regional intangibles (within the regional environment).

The paper is organized as follows: section 2 introduces key conceptual propositions on intangible assets for MNEs and for regions, defining the three IAs at the centre of our analysis. Section 3 details the methodology of our study including the conceptual design of the interview guides, the criteria adopted to select the companies and the framework for analysing the results. Section 4 presents the evidence from our in-depth case studies, identifying the key channels through which each of the IAs are enhanced in MNEs innovation processes, and describing their spatial roots and impact. Section 5 concludes, highlighting some policy implications of our findings.

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2

INNOVATION IN MNEs AND REGIONS: THE ROLE OF HUMAN, ORGANISATIONAL AND NETWORK CAPITAL

Intangible assets are increasingly seen as critical drivers in the productive application and exploitation of knowledge and physical capital, re-shaping the way economic processes are comprehended, measured and governed at the micro, meso and macro level. Whilst a review of the different approaches that have been developed is out of the scope of the present paper3, it is important to clarify how IAs can help understand the innovative activities of MNEs and their regional embeddedness. This requires identifying and defining key IAs at the micro level (i.e. assets that belong to and are exploited by the individual firm), key IAs at the meso level (i.e. collective assets belonging to a set of interconnected firms, research institutions and other organisations within the same region) and the ways they feed into each other. These three aspects are covered in turn in the sub-sections below.

2.1

MICRO LEVEL INSIGHTS - INTANGIBLE ASSETS AND FIRMS

In the past decade, the study of IAs has received increasing attention by scholars from the management and accounting science, recognizing that immaterial assets yield critical returns for firms, as they represent a major source of value creation.4 Whilst the accounting literature has mostly elaborated on the issue of external financial reporting of intangible assets, defining them as “a non-physical source of expected future benefits” (ABERNETHY et al., 2003, p. 17), business strategy scholars have focused on conceptual frameworks for identifying, collecting and analysing intangibles for internal management purposes, defining IAs as “resources that are not visible in the balance sheet, but that add value to the enterprise" (EDVINSSON, 1997, p. 322).

Although different approaches have focussed on different value components, human resources, organisational features and the ability to networking have commonly been highlighted as critical features to create value.5 One of the most prominent and clearest 3

We refer the reader to ABERNETHY et al. (2003) and KAUFMANN and SCHNEIDER (2004) for comprehensive reviews on Intangible Assets at the firm level. 4 Approximately 80% of the total market or company value today can be linked to intangible assets, compared to only 30-40% in the mid-80s (SCHNABEL, 2002). 5 This is not to say that other intangible assets, such as Social Capital or Entrepreneurship Capital, are not relevant when looking at value creation and growth at the regional level. For in-depth insights on these IAs, see IAREG Deliverable 2.1 and 3.3.

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efforts to understand intangible assets has been proposed by EDVINSSON and MALONE (1997) in the Skandia Navigator Project6, which introduced the concept of intellectual capital and defined it as the combination of human capital and structural capital. Whilst the former refers to the knowledge embodied in employees, the latter comprises two subcategories: customer or relational capital, which refers to knowledge linked to external relationships of the firm; and organizational capital, which refers to the structures that are able to transform individual know-how in a collective advantage for the whole firm. Subsequent contributions have developed comparable concepts: for instance, LEV (2001, 2005) includes products and services, customer relations, human resources and organizational capital in his taxonomy of intangibles; KAPLAN and NORTON (2001, 2004), from a business strategy perspective, suggest three sets of IAs based on human capital, information capital (the company’s databases, information systems and technology structure) and organizational capital; DAUM (2003), building on these contributions, develops a quadripartite taxonomy of IAs composed of human capital, structural capital, customer capital, and business partner and economic web capital.7

To sum up, a broad spectrum of definitions and taxonomies has arisen in the accounting and management literature. From these, three essential IAs can be commonly identified: human, organizational and network capital. These intangible assets are highly complementary, especially the last two as they are intrinsically linked and could be jointly referred to as structural capital. Whilst the contributions reviewed here have focused on IAs as a source of value creation, in this research we will use the same concepts to analyse the very nature of the innovation process (rather than its contribution to value creation), focusing on the role that IAs play in supporting the innovative capacity of MNEs.

6

The Skandia Navigator is an Intellectual Capital model first used by the Swedish bank-assurance company Skandia in 1994. EDVINSSON was then acting as the company’s Chief Knowledge Officer. 7 The last category of IA as proposed by DAUM (2003), business partner and economic web capital, is of major interest as it adds a system perspective to the taxonomy of intangible assets and recognizes, more explicitly than in other approaches, the proliferation of networks as a major component of new organizations.

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2.2

MESO LEVEL INSIGHTS - INTANGIBLE ASSETS AND REGIONS

The literature on the geography of innovation has emphasized that the very complex nature of knowledge, which makes its exchange and transfer difficult, is at the root of spatial economic and technological agglomerations. Knowledge creation is a systemic, cumulative, partially tacit and sticky phenomenon. It is systemic, because, as will be explained in more detail below, it relies on the interaction of different related actors; it is cumulative and path dependent because, as shown by NELSON and WINTER (1982), the set of decisions that innovative actors face are determined by the decisions made in the past; it is partially tacit because part of the knowledge is embedded in work and organisational practices and its codification is an expensive process (POLANYI, 1966). In other words, knowledge is embodied in people, places and routines and is therefore sticky. It follows that knowledge is to a large extent geographically specific, as it is generated in particular geographical contexts, and often spatially bounded, as it is not always easy to transfer it elsewhere.

The notion of Intangible Assets can be helpful in understanding technological spatial agglomeration that arise as a consequence of the very nature of knowledge, shedding light on the regional attributes that facilitate knowledge creation, accumulation and diffusion (see AUDRETSCH and FELDMAN, 2005). Indeed it has been shown that a skilled workforce (i.e. regional human capital) is essential to sustain knowledge flows, often through mobility across different segments of the systems (SAXENIAN, 1994; ALMEIDA and KOGUT, 1999). Moreover, as pointed out by BOSCHMA (2004) among others, knowledge exchange is supported by organizational and cultural proximity (i.e. regional organisational capital) and, most of all, by networking and interactions among firms and local institutions (see among the others BRESCHI and LISSONI, 2001; COOKE, 2001 and 2007; BRESCHI and MALERBA, 2007). Such networked relationships (i.e. regional network capital), however, should not be seen as purely local as wide extra-regional interconnections are required to sustain innovation dynamics in a globalised economy (e.g. MASKELL, 2001; HUMPHREY and SCHMITZ, 2002).8 These aspects mirror clearly the IAs identified above for MNEs; in other words, human capital, organisational and network capital, which sustain 8

If that is not the case, collective learning processes might act as barriers to exit for insiders rather than barriers to entry for outsiders (BIANCHI, 1989).

8


knowledge creation in the firm, can be recognized as operating also at the regional scale, favouring the process of knowledge spillover and in turn innovation and regional growth.9

The literature on Regional Innovation Systems (i.e. COOKE, 1992; DOLOREUX and PAARTO, 2005; IAMMARINO, 2005) - derived from a spatial application of the concept of Systems of Innovation (FREEMAN, 1987; EDQUIST, 1997) - provides an appropriate framework to grasp the economic importance of IAs at the local level. This body of research stresses three main issues: (1) that innovation is an interactive process among public and private actors and institutions; (2) that the regional system is defined in a specific context where networks of such actors and institutions act and interact for generating, importing, modifying and diffusing new knowledge and technologies, and (3) that all the economic and knowledge processes created inside and outside the firms are “embedded” in such structures (COOKE et al., 1998). In other words, at the mesolevel IAs cannot be considered merely as the sum of individual firms’ IAs (IAMMARINO et al., 2008; VON TUNZELMANN, 2009). A region embeds many systemic elements external to the firm that influence its innovation activity and growth (e.g. COOKE et al., 1997; COOKE, 2001; IAMMARINO, 2005). While the individual firm can regard some of these as exogenous – for instance, a pool of specialised human capital produced in the local area – for the region itself this is not so. Nonetheless, the development of regional IAs shares many of the features of the micro-level: it is a long, uncertain and costly process, showing high path-dependence and cumulativeness. As put by REVILLA DIEZ and KIESE (2006), to understand regional innovation, organizational, relational and dynamic dimensions need to be taken into account in conjunction with the techno-economic and spatial ones. From our perspective this means that also at the regional level, IAs are integrated with each other and operate in conjunction to support the innovative process.

9

Despite this wide recognition, the notion of regional IAs in not systematized and no uncontroversial understanding or taxonomy has emerged (DI TOMMASO et al., 2004).

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2.3

MNEs, REGIONS AND INTANGIBLE ASSETS

The territorial embeddedness of MNEs has been recently addressed in the literature (see among others, CANTWELL and IAMMARINO, 2003; COOKE, 2005; CANTWELL and PISCITELLO, 2005; REVILLA DIEZ and BERGER, 2005; McCANN and MUDAMBI, 2005; IAMMARINO and McCANN, 2009). Empirical evidence finds a strong regional focus of MNE networks in Europe, depicting their attempt to tap into the local knowledge base and feed it into intra-firm global networks. This means that regional intangible assets, embodied in human capital, local networks and in the critical mass of innovation actors represent a major locational advantage on which MNEs build and

reinforce

their

competitiveness

in

global

markets

(CANTWELL

and

IAMMARINO, 1999; LERRO and CARLUCCI, 2007; CAPELLO et al., 2008).10 MNEs are in fact able to benefit from the dynamic economies of scope that derive from the technological complementarities between related paths of innovation in spatially distinct institutional settings. In doing so, they not only spread their competence base and acquire new technological assets, but they also contribute heavily to regional innovation systems. They do so firstly by offering a “package” of intangible assets (technical knowledge, management capabilities, etc.) to their local customer, suppliers and collaboration partners, and secondly by providing access to complementary streams of knowledge being developed in other regions (CANTWELL and IAMMARINO, 2003). As the strengths of any innovation system depends on the density and interaction among its components, MNEs, with their ability to balance global and regional knowledge, are a critical component.

To sum up, it has been shown that IAs, and specifically, human, organisational and network capital, can not only help understand how innovative processes are organised within MNEs, but they can also shed light on the mechanisms through which MNEs are territorially embedded. This paper addresses these research challenges by exploring IAs at the micro and meso level and by analysing their interaction. Specifically, at the micro level the dimensions across which each of the three IAs shapes MNEs strategies are identified, whilst at the meso level the focus is on the mechanisms through which regional and firm’s IAs interact to enable knowledge to flow. 10

To put it with ENRIGHT (1998, p. 315), resources and capabilities that are critical for firms’ competitive success “can often be found inside a region, rather than within any single firm”.

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3

METHODOLOGY, DATA COLLECTION and FRAMEWORK FOR ANALYSIS

In our empirical investigation we analyze the above stated research issues through a qualitative case study approach. We study six MNEs belonging to the ICT, Automotive and Life-Science industries (two for each sector) operating both in Germany and the UK. More precisely, our investigation in the Automotive sector includes two MNE headquarters, one UK-owned and one German-owned as well as one respective subsidiary in both Germany and the UK. Similarly, in the Life Science (Pharmaceutical and Agro Chemical) industry we study two MNE headquarters (one in the UK and one in Germany) and their respective subsidiaries in the forecited countries. Whilst we were able to implement this approach in the Automotive and Life Science industry, we were not able to include UK-based MNEs from the ICT sector in our final sample. Therefore we interviewed two German MNE headquarters and their respective UK-subsidiaries. The analysis is based on forty-four semi-structured expert interviews with senior managerial and technical staff from different business units within the firms.11 These primary data are in turn supported with information from firms’ publications, press releases and scientific literature.

The case study method has been preferred to a survey based approach because, through the demonstration of individual corporate strategies, it delivers a more detailed picture of the innovation structures and processes. Such a picture is further enriched by the high variety of roles of the interviewees, which capture the pervasive and interrelated character of the innovation activity, and by the fact that the research design disentangles micro, sectoral and regional aspects, therefore delivering a more comprehensive understanding of the impact of IAs. Finally, as the evidence is gathered from multiple cases, it provides compelling and robust results.

11

In Germany, 21 interviews were carried out in total, of which five were in automotive firms (three interviews in German MNE headquarter, two in UK-subsidiary), nine in ICT firms (all in German MNEs) and seven in Life Science firms (three in German MNE headquarters, four in UK-subsidiaries). In the UK we carried out 23 interviews, of which eight in automotive firms (four in UK MNE headquarters, four in German subsidiaries), eight in ICT firms (all in German subsidiaries) and seven in Life Science firms (four in UK MNE headquarter, three in German MNE subsidiaries).

11


The development of the methodology has proceeded in three steps: (1) Preparation of the research design and interview guides (2) Firms selection (3) Definition of the analytical framework This section will give insights on the above aspects covering the conceptual design of the interview guides and mode of analysis, and the criteria applied for selecting the companies which are included in the analysis.12 The three steps are deeply connected with each other, and the tri-partite structure of this section follows a logic, rather than a chronologic order.

3.1

RESEARCH DESIGN AND INTERVIEW GUIDES

A thorough literature review of conceptualizations on intangible assets, MNEs’ innovation strategies and regional innovation systems was firstly conducted to identify research questions and hypotheses, on the basis of which we designed our five interview guides (see Appendix). These were addressed to two to five employees in each MNE headquarter and subsidiary abroad from: Research and Development, Human Resources,

Production,

Communications/Government

Relations

and

Corporate

Development. In fact, the different interview guides contain both some general questions common to all the interviews and some specific ones related to the function of the interviewee in the company.

The common questions cover broadly innovation activities and strategies of the analyzed MNEs, external collaboration with science and industry, regional business environment for innovation (including human capital needs) and recommendations for long-term competitiveness.

12

See YIN (2004) and BORCHARDT and GÖTHLICH (2007) for methodological concepts and insights on case study analysis.

12


The specific questions, on the other hand, cover aspects of different IAs, according to functional area of work of the interviewee, as summarized below: •

Corporate Development (focus mainly on organisational capital): questions cover the organizational structures for successful conduction of international innovation and R&D, the regional location factors and intangible assets that were perceived as critical, the regional innovation capacity and the role of proximity in innovation processes.

•

Research & Development (focus mainly on network capital): questions cover the spatial and functional structure of the R&D, the relevance, motivations and modes of external collaboration and the role of the regional environment for innovation.

•

Production Planning/Manufacturing (focus mainly on organisational capital): the interviews explore the organizational structures of production capacities, the market and trade relationships relevant for innovation and the role of the regional business environment in supporting production. The focus is on intra- and inter-firm organizational structures that support innovation through sharing and transmission of knowledge.

•

Human Resources (focus mainly on human capital): the interviews explore the recruiting strategies of MNEs, the role of intra-firm labour mobility, the role of internal and external networks for education and the capacity to access adequate skills.

•

Corporate Communications (focus mainly on network capital): the interviews comprise a selection of questions which are primarily based on the above introduced interview guides and additionally explore the role of communication in supporting technology intensive projects and external collaborative links with academia and industry.

•

Government Affairs (focus mainly on organisational capital): the interviews revolve mostly around the management of the interaction with government, in terms of regulators, stakeholders and potential public R&D funders. The focus is on how governance impacts on strategic innovation choices.

13


By including interviewees from the above MNEs departments, we are able to grasp the different dimensions of intangible assets.13 Moreover, by studying six different firms, i.e. their headquarters and respective subsidiaries in both Germany and the UK, belonging to the ICT, Automotive and Life-Science industries, we can provide some evidence on sectoral and country specificities. 3.2

FIRMS SELECTION CRITERIA

In selecting our companies, we needed to account for both sectoral and national specificities that could influence the degree of regional embeddedness of MNEs. As a consequence, our sample required both to include industries with different innovation patterns (in terms of length of the R&D investment, regulatory requirements, market maturity, etc.) and to ensure consistent comparability across the two countries of study, i.e. Germany and the UK.

The first issue was addressed by covering MNEs in the ICT, Life Science and the Automotive sectors. The second aspect was dealt with by interviewing the same MNE in the two countries (i.e. the home and the host country). To do so we identified the following two populations of firms: a) Companies with headquarters in Germany and subsidiaries in the UK b) Companies with headquarters in the UK and subsidiaries in Germany From these populations, a non-random sample of 31 firms, 17 based in Germany and 14 based in the UK, was selected using the Hoppenstedt and Hoovers14 company databases. Of these 31 firms, we retained those that were among the 1250 with the highest R&D investment (as defined by the R&D Scoreboard 2007)15 and among the FT500.16 As a result we were left with 14 UK based companies (of which five in the ICT sector, five in the Automotive sector and four in the Life Science sector) and 13 13

Although the roles of the interviewees not always fit unambiguously in one category only, our interviewees can be classified as follows: in the UK we carried out three interviews in Corporate Development, three in Production Planning/Manufacturing, five for Human Resources, eight for R&D and four for Corporate Communications/Government Affairs. In Germany we carried out eight interviews in Corporate Development, two in Production Planning/Manufacturing, four in Human Resources, seven in R&D and one in Corporate Communications/Government Affairs. 14 www.hoppenstedt.de and www.hoovers.com. 15 The R&D Scoreboard 2007is published by the UK Department for Innovation, University and Skills (DIUS) in collaboration with the Department for Business, Enterprise and Regulatory Reform (BERR). 16 These two criteria were loosened in one case, for a company which, albeit not among the R&D spenders, conducted R&D as its core business and therefore could provide very interesting insights.

14


Germany based companies (of which four in the ICT sector, five in the Automotive sector and five in the Life Science sector).

We then proceeded to contact all the above 27 firms with the aim to interview two MNEs per each sector, of which one was headquartered in Germany and one in the UK. However, whilst this was possible in both the Automotive and Life Science sector, we were not able to include UK based firms of the ICT sectors in our final sample and therefore interviewed two German MNE headquarters with UK subsidiaries. 3.3

FRAMEWORK INTERVIEWS

FOR

ANALYSIS AND

CODIFICATION

OF

THE

In order to understand how Human Capital, Organisational Capital and Network Capital at the MNE level feed into regional IAs and vice versa, we first identified the key dimensions through which IAs are enhanced at the micro level and secondly the mechanisms through which they interact with the spatial environment.

Building upon EDVINSSON and BOUNFOUR (2004), our focus is on the processes and structures that sustain and facilitate each IA (i.e. processes of establishing knowledge networks, competencies inside and outside the MNEs, etc.), and on the impacts of such IAs (e.g. the actual building and existence of networks of cooperation, regional organizational capacity for innovation).17

As a result, for each intangible asset, we distinguish between: (1) The micro-level dynamics of the IA (Processes & Structures) (2) The micro IA relying on regional intangible assets (Processes & Structures) (3) The micro IA impacting on regional intangible assets (Impacts) This process relies on a careful codification of the interviews which requires both defining each IA at the micro and meso level and extrapolating, from the interviews, the MNEs activities and aspects that relate to it, as detailed below.

17

In prior research, a similar approach has been used to benchmark the performance of EU innovation systems (IPTS Report 74, see BOUNFOUR, 2003).

15


Human Capital Human Capital, as intended in this analysis, includes the capabilities of the employees that add the greatest value to the company, namely professional capabilities (i.e. high productivity), commercial capabilities (i.e. the ability to collaborate with customers and external partners), and social ones (the ability to share knowledge). At the regional level, on the other hand, human capital refers to the local availability of skills and to the regional processes of skills formation. This intangible asset is crucial to both the firm’s absorptive capacity, i.e. the capability of the firm to absorb and commercialize high value external knowledge (COHEN and LEVINTHAL, 1990; AUGIER and TEECE, 2005) and the regional absorptive capacity, i.e. the ability to capture and apply new knowledge within the regional production system (e.g. ASHEIM and ISAKSEN, 2002; HOTZ-HART, 2003).

In order to understand how human capital is developed in the firm and the channels through which such IA is enhanced, we focus on the following aspects: • • • • •

Employee profile (academic and professional background) Recruiting procedures and channels Intra- and inter-firm labour mobility Modes of training and up-skilling Professional development and talent management.

To understand the extent and modes in which the company relies and impacts on the regional skills we examine the following: • • • •

Availability of relevant skills in the regional labour market Extent of employee mobility across firms in the area Reliance on local providers of training Involvement with education and qualification networks.

Organisational Capital Following BOUNFOUR and EDVINSSON (2005) this IA comprises the organizational infrastructure, procedures and working schemes which support intra-organizational as well as inter-organizational knowledge and information flows. By regional organisational capital, on the other hand, we refer to the regional institutions and policies that facilitate the process of knowledge creation, diffusion and accumulation at the territorial level.

16


To analyse the features of organisational capital in MNEs, in our interviews we explore the following aspects: • • •

Modes of internal organisation of innovative activities (local/global resources) Role of different company departments supporting innovation (intra-firm) Role of spatial proximity and organisational modes to secure face to face contact.

To understand the extent and modes in which the company relies and impacts on the regional organization of innovation we look at: • • • •

Role of regional innovation policies Presence of relevant public and private actors Functions of MNEs in industry and innovation networks Characteristics of the regional business environment.

Network Capital We defined network capital as the capacity of the MNE to exchange information and knowledge and to promote collective learning with other innovation actors, such as other firms and research institutes. By regional network capital, on the other hand, we refer to the capacity of the regional actors to engage with each other to exploit the advantages of geographical proximity for knowledge creation, accumulation and distribution.

To explore network capital in MNEs, in our case studies we investigate: • • • • •

The existences of collaborations with other firms and universities The evolution of such collaborations Their spatial distribution The modes of collaboration The advantages and problems of these collaborations.

To evaluate the extent to which the firms’ networks impinge and contribute to the regional networks we look at: • •

The presence of a critical mass of interacting agents involved in R&D The collective governance of such interaction.

As it has been already stressed, intangible assets are highly complementary and especially the last two IAs are intrinsically linked. Their analysis therefore needs necessarily to be read and interpreted jointly.

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4

CASE STUDY RESULTS

The research has produced a detailed picture of processes supporting IAs and mechanisms facilitating regional MNEs’ embeddedness. Before reporting our results, however, it is worth specifying the regions in which the investigated firms operate in order to contextualise our empirical findings.

Case Study Regions In Germany, four of the six investigated MNEs (i.e. the two ICT headquarters and two UK-owned subsidiaries from the Automotive and Life Science industries) located the majority of their operations in the high-tech agglomerations of the south, particularly in the regions of Baden-Württemberg and Munich. The other two German firms, operating in the Automotive and Life Science industry, had their headquarters in the lower Rhine area of North-Rhine Westphalia (however, also with significant capacities in Berlin) and in the South-East of Lower Saxony. Baden-Württemberg is one of Germany’s most prosperous areas characterised by flagship mechanical engineering firms and a highly developed network of SMEs specialized in supplying components, production and development. The Stuttgart and Karlsruhe region, industrial centres of the Federal State of Baden-Württemberg, are leading high-tech agglomerations in Germany, comprising approximately 12.3 % of all employees in industrial research and 12.9 % of all patent applications in Germany (2005).18 The regional innovation system is supported by strong vocational education and excellent universities (such as Heidelberg and Karlsruhe University), and a welldeveloped regional organisational capacity, expressed by, for example, an advanced infrastructure for technology transfer (such as the Steinbeis Foundation’s region-wide network of tech-transfer offices)19 and regionally organized producer associations. Similarly, Munich is one of the leading business and research regions in Europe, with an innovation system characterised by a high density of knowledge intensive SMEs and MNEs, operating in the ICT, bio-tech and mechanical engineering. The area comprises 18

Source: SV-WISSENSCHAFTSSTATISTIK and GERMAN PATENT AND TRADEMARK OFFICE (2005). 19 The Steinbeis Foundation for Economic Development offers several activities related to knowledge and technology transfer (e.g. consulting, market and transfer orientated R&D), thereby fostering partnership and knowledge-sharing between academic institutes and businesses.

18


roughly 13 % of all employees in industrial research and 8.6 % of patent applications in Germany (2005)20 and is characterized by a high concentration of excellent scientific institutions, including several Max-Planck and Fraunhofer research institutes, and two of the nine elite universities selected by the “Exzellenzinitiative” of the German Federal Ministry of Education and Research.21 The analyzed German MNEs from the automotive and pharmaceutical industry, on the other hand, have concentrated the majority of their operations outside the above introduced high-tech regions. The pharmaceutical firm has located the core of its German units in the lower Rhine area of North Rhine Westphalia and in Berlin – particularly the former region characterized by a technologically advanced industrial structure with core competencies in the chemical and health care industry. The automotive MNE, on the other hand, is located in the south east of Lower Saxony. This is one of the TOP 5 German automotive clusters in terms of employees in knowledge intensive industries and, as of 2005, comprised 10.6 % of the patent applications in the industry.22

In the UK, the majority of MNEs interviewed (i.e. both the Automotive and Pharmaceutical UK headquarters, and the ICT and Life-Science German subsidiaries) have the core of their operations in the Greater South East, a meta-region spanning for 150 miles around London, from Cambridgeshire in the north east, to Dorset in the south west, and around the south east coast. This area largely outperforms the rest of the country in terms of economic and productivity growth; it accounts for over a third of the national R&D and has the highest concentration of universities and public research institutions. Such strong presence of innovative actors sustains and facilitates the processes of knowledge spillovers across firms, enhancing the technological performance of MNEs. Within this broader region, there are several key technological clusters, to which some of the interviewed companies belong, including the electronics and life science clusters in Cambridge and the ICT agglomeration in the Thames Valley. The former is characterised by a large share of small high-tech companies (over 60% of

20

Source: SV-WISSENSCHAFTSSTATISTIK and GERMAN PATENT AND TRADEMARK OFFICE (2005). 21 Within the framework of the Initiative of Excellence the Federal Government is promoting top class university research with 1.9 billion Euros, aiming to establish international visible research institutions in Germany (WISSENSCHAFTSRAT N.D.). 22 Source: GERMAN PATENT AND TRADEMARK OFFICE (2005).

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bio-tech firms have less than 10 employees).23 Its success is largely linked to the presence of the University of Cambridge, which, as of 2005, had the highest research income in the country and which, by funding spin outs and Science Parks, had a key role in the industrialisation of the area (MINSHALL and WICKSTEED, 2005). The Thames Valley encompasses the M4 corridor of IT and life sciences companies in Reading, Slough, Bracknell, Maidenhead, Newbury, High Wycombe, Windsor and Basingstoke. It is characterised by a large presence of foreign firms (over 2,000) and by strong links with the close Universities of Reading and Oxford. In both cases, regional public and private initiatives have been important in sustaining innovation: the Thames Valley Economic Partnership and the Cambridge Partnership, for instance, both gather the private sector, government agencies and educational institutions, to facilitate innovation and develop the talent pool in the two areas. Both the automotive firms interviewed in the UK (i.e. the UK-owned MNE and the subsidiary of the German MNE), operate in the historical cluster centred in the West Midlands and spanning to the North East of England. However, whilst the German subsidiary has its main site there, the UK firm has only some of its facilities in this area, (having most of the sites in the South East). The West Midlands hosts 1500 auto companies, has a total turnover of around £13 billion per year and employs 115,000 people.24 The Northwest is home to 450 automotive companies, 200 of which are major automotive supply chain companies, has an annual business turnover of £9 billion and employs 43,000 people.25 The industry has experienced dramatic shifts in the past decades with a reduction of the manufacturing base and the regional innovation system has witnessed increasing public and private partnerships to support competitiveness and innovation, such as the West Midlands PARD (Premium Automotive R&D) or the Northwest Automotive Alliance.

In what follows, we present the main results for human, organisational and network capital in turn. Unless otherwise stated, the analysis applies both to Germany and the UK and covers both MNE headquarters and subsidiaries abroad across sectors.

23

Source: GREATER CAMBRIDGE PARTNERSHIP (2007). Source: ADVANTAGE WEST MIDLANDS (2007). 25 Source: NORTH EAST DEVELOPMENT AGENCY (2007). 24

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4.1

HUMAN CAPITAL

Investment in human capital is at the core of MNEs efforts to increase competitiveness as the high pace of technological progress and scientific developments require continuous education and qualification efforts. Overall, strategies to attract and retain talent are quite common across sectors despite the fact that industries face different skills constraints on the supply side. MNEs processes broadly fall into three categories (1) talent management and individual up-skilling, (2) strategic skills forecast and (3) engagement with higher education.

(1) Talent Management and Individual Up-Skilling: Under this heading we group all the initiatives targeting the firm’s employees or potential candidates. Facilitated by their global network, MNEs are able to capture international trends in human capital management and education far better than locally operating companies (HARVEY et al., 2000; DE CIERI and DOWLING, 2006); indeed our analysis shows a remarkable sophistication of hiring methods and talent management processes. As for the former, traditional strategies (specialist press, head hunters, etc.) are being complemented by social network software systems, to attract especially the youngest highly qualified segments of the labor market. As for the latter, firms are investing increasingly in leadership programs for high profile candidates and developing systems to define clearer career paths with individually tailored training. Surprisingly, whilst it is generally acknowledged that intra-firm mobility is valuable, structured programs to exploit this source of knowledge exchange more systematically are not in all cases in place and intra-firm mobility tends to occur on an ad hoc basis. The only exception is that of new young employees enrolled in graduate programmes which offer the possibility to work in other facilities abroad.

(2) Strategic Skills Foresight: Human capital, as a critical asset to the firm, requires to be managed with a long-term view, therefore awareness of future skills demand and supply (both in the long and middle terms) is crucial. The interviewed MNEs are especially active in monitoring human capital supply in the long run and showed awareness and concern for the insufficient future availability of scientific skills. In the UK, for example, one of the firms in the automotive sector produced a report to estimate the entity and cost of the future skill-gap, advocating urgent action from the 21


government. Indeed, precisely to tackle long-term skills gaps, Science Awareness programs which encourage primary and secondary students in the vicinity of own facilities to enrol in scientific education are pursued by many of the interviewed MNEs, especially in their home-base country.

On the other hand, skill needs in the short and middle-run are in some cases forecasted through specific tools (such as the Development Needs Analysis) that evaluate human capital requirements in relation to business trends. The same tools are also used to identify intra-firm and extra-firm talent pools that could be employed to meet such requirements. In some German MNEs (operating in Germany), the engagement goes even further and coordinated efforts with regional educational institutions have been undertaken. For instance, the human resources unit of one of the German automotive firms reported to be actively engaged with a regional chamber of commerce, particularly by initiating specialized educational programmes in fields where demand was expected to grow (such as electro-mechanical engineering).26 Additionally this firm established a corporate university at its headquarter location to secure life long learning of its employees, conduct basic research in fields such as production technologies, coordinate collaboration with regional university partners and implement its PhD programme. For similar reasons, one of the pharmaceutical MNEs was involved in establishing a polytechnic in the vicinity of its German headquarter location, offering training in technical and pharmaceutical chemistry.

(3) Engagement with Higher Education: Corporate investment in human capital relies strongly on the higher education sector both for training and (mostly) for graduate recruitment. The latter is given strategic priority by all firms (although it has a less vital role for one firm in the Life Science Sector) and is sustained through structured graduate programmes. All the interviewees, across the different departments, highlighted the importance of such schemes from different perspectives, showing the multi-faceted relationships of MNEs with Higher Education. For instance, those from HR departments valued graduate programmes as means for early talent identification, which can then be developed through talent management and talent retention initiatives.

26

Germany’s dual education system is characterised by a strong vocational education, apprenticeship and training programmes, which generally creates the opportunity for coordinated initiatives as described above.

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On the other hand, interviewees from R&D units pointed out that these programmes are crucial to integrate graduates and particularly PhDs into industrial research, for instance by offering the opportunity to conduct small projects, such as under or postgraduate thesis, in site. As for the former, universities provide training to MNEs in two ways: firstly they are one of the elements of the educational portfolio (which includes polytechnics, industry associations, etc.) offering courses to enhance soft skills; secondly, universities occasionally engage in long term scientific training partnerships. In these initiatives, which tend to be international in scope, university and industry mutually exchange capabilities through lectures and/or sharing facilities on a regular basis. In both cases, the majority of the interviewed MNEs find that identifying the right academic collaborator can be a slow process: not only the different incentive structures between academia and industry constitute an obstacle, but there are also no efficient communication channels in place to identify the strengths of each university and the scope of potential collaborations.

Regional dimension We are interested in understanding how human capital investment at the MNE level becomes an asset for the region as a whole and vice versa. We identify several mechanisms (some of which with a clear sectoral dimension), for both directions of the interaction. (1) MNEs impact on Regional Human Capital: From our case studies, MNEs’ human capital increases regional skills in several ways. Firstly, MNEs have often strong collaborative ties with regional partners from higher education. These include investments in polytechnics and support of scientific and technical education in the vicinity (both financially and through seminar series or in-kind donations). In some cases, especially in German-owned MNEs operating in Germany, local human capital is increased through collaborations with regional policy makers, by supporting regional talent management and talent retention initiatives. For instance, the investigated automotive MNE operating in Northern Germany collaborates actively with state and city government officials in a “Study and Stay” programme, a place branding and talent management initiative designed to retain university graduates in the regional labour market. Furthermore, international intra-firm mobility within the MNE promotes the inflow of international talent, thereby adding cultural diversity to the regional

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knowledge repository. Finally, a prominent sectoral example of MNE impact on regional skills occurs through end-user training in the ICT industry, through which IT skills are transferred across industries.

(2) Impact of Regional Human Capital on the MNE: The regional availability of scientists and of innovative industries has important consequences on MNEs’ human capital. Indeed, although international recruiting is a key priority for all of the analyzed MNEs, sourcing of regional scientific personnel and recruitment of graduates remains a central objective in the development of strategic partnerships with local universities. In some cases, the local availability of scientists has in fact directly driven R&D investment decisions of MNEs (as will be explored in more detail below in the Network Capital section). Moreover, in a regional labor market with high density of innovative actors, MNEs’ human capital also benefits from high inter-firm interregional mobility. According to our interviews in the UK, MNEs located in the Cambridge Cluster and in the Thames Valley have high inter-firm mobility in which outflows generally balance inflows. This process makes, ceteris paribus, recruiting talent easier across sectors and is reinforced by the fact that higher quality of life in the two clusters facilitates attraction and retention of globally mobile talent. On the other hand, companies located in the Midlands reported more difficulties in recruiting. The picture is very similar in Germany, with high levels of inter-firm mobility in the ICT clusters of Munich and Karlsruhe as well as the automotive cluster in the Stuttgart area, and relatively greater difficulties in recruiting for (automotive) companies in northern Germany. 4.2

ORGANISATIONAL CAPITAL

Support to organisational capital for innovation occurs through three key dimensions: (1) the infrastructure assisting R&D decision making, (2) the internal knowledge transfer processes, and (3) the management practices for interdisciplinary projects. These are explored in detail below. (1) Organizational Infrastructure for Innovation - R&D Network Decentralization and Balance of Top-Down/Bottom-up Knowledge Flows: R&D infrastructure and its connection with other corporate business units is possibly the most important element of the firm’s organisational capital for innovation. It embodies the mechanisms through which strategic decisions are taken and implemented, and it significantly affects the

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organisational efficiency of the MNE. In our analysis we identified two dimensions of R&D infrastructure, which critically impact on the knowledge creation process: the degree of decentralisation of both research and development units and the way in which top-down corporate strategies are balanced with bottom-up knowledge flows from subsidiaries or decentralized units. Based on our interviews we identify, broadly speaking, two rather distinctive models. In some firms, highly centralised basic research facilities are used in order to catalyse economic resources and capabilities. This strategy is followed, for instance by one German MNE in the automotive sector, in which the central research facilities serve the network of globally spread subsidiaries carrying out strategic R&D for the whole group. A similar approach is taken by a German pharmaceutical company, which consolidated its pre-clinical research activities after a substantial merger with another German pharmaceutical MNE in its two headquarter locations, whilst it kept carrying out clinical research in several major markets.27 In these cases, whilst strategic R&D decisions are taken in the headquarters, development activities are highly decentralised and spread across various locations, as it emerged, for example, in the case of the subsidiaries of the German automotive MNE in the UK. It is precisely through development units that these MNEs tap into the different local knowledge, by operating in strict contact with clients, suppliers, regulators and policy makers in each region. On the other hand, some MNEs are developing highly decentralized and entrepreneurial R&D units, with large budget and planning autonomy. This model is chosen as it enables to manage the research portfolio more efficiently by tapping heavily into external knowledge at earlier stages of innovation. In fact, such decentralised approaches are being developed with the aim to expand the spread and scope of R&D collaborations with industrial or scientific partners and are often complemented by globally operating venture capital units that support the identification and development of new growth opportunities. At the same time, intense interaction of such R&D centres with local business and local service delivery units ensures inflow of relevant market information into the corporate R&D network. The risk of a decentralised infrastructure, however, is that it might result in an incoherent corporate strategy and the analyzed MNEs have developed different approached to avoid this. For instance, one UK MNEs operating in the pharmaceutical 27

Decentralized clinical research is very common in the pharmaceutical industry, mostly as a consequence of legal requirements and market access restrictions.

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industry has introduced new managerial positions with the mandate to globally coordinate independent research units and their collaborative strategies; alternatively, some MNEs, particularly in the ICT industry, have established specific departments that manage internal knowledge transfer from R&D to the rest of the company and vice versa. One of the German MNEs in the ICT sector, for example, institutionalized a corporate technology unit, an international staff unit with executive competencies playing a leading role within the firms’ R&D operations. More precisely, this unit acts as a global knowledge network for the business divisions and regional subsidiaries by coordinating global R&D, aligning it with corporate research planning, and developing future scenarios in the core areas of business activity. Similarly, research portfolio offices have been implemented by another MNE in the ICT sector, to evaluate and match internal and external research findings with the company’s own portfolio. Supported by intense and structured communication processes, these units secure the transfer and utilization of research in internal channels. In sum, through these mechanisms top-down knowledge flows from the corporate level ensure cohesion across the MNE giving rise to a complex knowledge architecture.

(2) Knowledge Transfer Structures (Intra-Firm): On the basis of the interviews, we identified three main channels through which internal knowledge transfers are managed. Firstly, face to face contact has emerged as the most important mechanisms of internal and external communication for all interviewed firms. This is especially the case at the beginning of technologically complex projects, where the knowledge gaps with collaborators (internal or external) or clients are larger. Secondly, IT-based support structures, such as workshare-platforms, directories, intranet-based document systems or wikis are broadly used across the MNEs interviewed. Thirdly, as mentioned above, some of the investigated companies have developed specialized business units or positions particularly focusing on intra-firm knowledge transfer, which collect and evaluate all internal research results comparing them against external sources (such as research portfolio offices).

(3) New Management and Coordination Tools for Interdisciplinary Processes: Innovative activity relies on a diversified mix of skills, therefore adequate organisational approaches to manage knowledge exchange across different disciplines are critical. Indeed, a wide range of coordination and management methods has emerged 26


from our analysis. These include, among others, the implementation of a Product Life Continuous Management Approach in which different teams, which traditionally operated in separate stages of product development, are jointly involved throughout the project life, streamlining the whole process. In this approach, which is followed in a German automotive MNE in its UK and German locations, team integration is achieved through cross-functional review forums and meetings, as well as specific software packages. Alternatively, interdisciplinarity is achieved, as reported by one of the automotive companies in Germany, by making team members work together in the same physical space, as a separate project-based and mostly temporary unit of the company. This strategy, referred to as project house, allows the firm to pool specific competencies for research and development tasks from several national and international business units. Finally, a third interesting example occurs where MNEs, particularly from the ICT sector, pilot new research products with lead users in a reallife environment – an approach adapted from clinical research in the pharmaceutical industry.

Regional Dimension By regional organisational capital we refer to the regional institutions and policies that facilitate the process of knowledge creation, diffusion and organisation at the territorial level. MNEs are themselves a key element or facilitators of regional organisational capital and, at the same time, they are influenced by local institutions and policies, responding to the local incentives and business opportunities. These bi-directional links are explored below.

(1) MNEs impact on the Regional Organisational Capital: Most obviously, MNEs’ impact on the regional organizational capital occurs through their R&D network infrastructure, especially when firms follow a decentralized approach with the aim to interact with the local knowledge base. As this aspect has been covered above, we focus here on three additional channels through which MNEs can enhance regional organizational capacity for innovation. Firstly, inter-industry initiatives sponsored by MNEs are used to stimulate local and cross industry knowledge spillovers: a relevant example is provided by a regional research and transfer platform developed by an ICT firm, which funded inter-industry spin-outs and invested in new interdisciplinary research lines in Germany (see Box 1). A second type of influence occurs through 27


MNEs institutional participation, as active stakeholders, in regional cluster initiatives, chambers of commerce or science advisory boards. Through such participation MNEs can affect coordinated investments in quality of place, regional talent management projects or schemes to financially support star scientists in regional universities. There are several examples of such participation. For instance, in the UK, the Thames Valley Economic Partnership, to which one of the interviewed MNEs (a German ICT subsidiary) belongs, has established the TV Investment Network, a business angel network that funds high-tech start ups in the region. Thirdly, regional organisational capacity benefits from corporate venture capital units which are often present in knowledge centers. Such units, found in Germany across the three sectors, foster commercialization of regionally created knowledge and IP by supplying local innovative partners (universities, SMEs, etc.) not only with venture capital, but also with access to the MNE’s knowledge network.28 For example, one of the MNEs in the ICT sectors headquartered in the regional innovation systems of Munich has established close links to the local universities, supporting them in efficient innovation management, patent applications and by supplying seed capital for starts-ups.

28

Most commonly, these Venture Capital Units operate on a global scale and in particular the VC Units of the analyzed MNEs operating in the UK showed a less regional focus. Nevertheless, close ties to regional knowledge centers can be observed in several cases.

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Box 1: MNEs impact on the Regional Organisational Capital Cross-Industry Research and Innovation Incubator in the regional innovation system of Baden-Württemberg The cross-industry research and innovation incubator is a profit-oriented research and transfer platform initiated by six MNEs from the ICT, chemical, pharmaceutical, mechanical engineering and print media industry (holding 50 % of the shares) as well as two highly renowned local universities (holding the other 50 % of the shares). The incubator is located in the “Metropolitan Region Rhine Neckar” in the border triangle of Baden-Württemberg, Rhineland-Palatinate and Hesse. The primary objective of this initiative is to promote cross-industry collaborative and interdisciplinary research of the regional partners, particularly in the field of organic electronics, and to transfer the created intellectual property into marketable products. This institutionalized and profit-oriented transfer model fosters regional organisational capital for innovation in multiple ways. University-industry linkages are promoted firstly through the recruitment of international start scientists, secondly through joint talent development initiatives with universities, thirdly by promoting temporal cross-move programmes from basic to applied industrial research. Moreover, entrepreneurship (via start-ups or spin-outs) is sustained by supporting the development and commercialisation of ideas generated within the incubator environment. These ideas are often in fields out of the core business of the MNEs or in market niches but present substantial innovation and value creation potential. Geographic proximity allows the partners to benefits from ad-hoc face to face interaction, building upon a common knowledge base with diverse but complementary capabilities generating learning externalities (i.e. cognitive proximity; see BOSCHMA, 2005). These regional efforts have been partially stimulated by governmental R&D and collaboration incentives, in particular by the Clusters of Excellence initiative funded by the German Federal Ministry of Education and Research, confirming the importance of a systemic support to regional organisational capital.

Overall, our analysis reveals that the direct corporate influence on local organizational capital tends to be higher in firms operating and headquartered in Germany. In the UK, in fact, the impact occurs mostly indirectly, through the activities of industry or regional associations to which the MNEs belong. This finding is largely unexpected and warrants further investigation. Specifically it raises questions on whether the origins of such differences are to be found in the more liberal Anglo-Saxon business culture or on the weak relationship between business and academia in the UK (as identified by COSH et al., 2006).

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(2) Regional Organisational Capital and its Impact on MNEs: The regional organisation of innovation can have important impacts on the degree of territorial embeddedness of MNEs operations. In particular, we identify three key aspects that strengthen MNEs’ regional integration: the presence of networking platforms and cluster initiatives, the presence of regional policy incentives for innovation and, most importantly, a critical mass of innovative actors. In other words, for MNEs’ to be attracted and effectively embedded in a location, the presence of scientific excellence is a necessary condition which, however, it is per se not sufficient, as multinationals can easily access global scientific knowledge. Therefore, regional policy initiatives supporting innovation, cluster development and public-private networking are necessary to create a favourable access of MNEs to the regional knowledge repository, enhancing their territorial embeddedness. As mentioned throughout the text, several institutions of these kinds exist in the regions studied. These include the aforementioned Thames Valley or the Greater Cambridge Economic Partnerships, public-private partnerships (PPP) that sustain economic and innovative activities in the areas. Examples from Germany include the Rhine-Neckar Metropolitan Region initiative, an inter-regional PPP aiming at efficient utilization of regional core competencies or the Steinbeis Foundation for Economic Development, which supports partnership and knowledgesharing between academic institutes and businesses. An interesting difference emerged again among MNEs operating in the two countries: interviewees in the UK (regardless of the country of ownership of the MNE) were overall less aware of local incentives and local initiatives. In fact, when asked about their relationship with regional institutions and government bodies, several of them reported low levels of interaction. Of those that reported being involved in cluster development or other local policy initiatives, only some had adopted a pro-active approach (for instance, by applying for regional funding streams or by sitting in regional boards). Others described learning of and participating in regional initiatives only after being contacted by the relevant institution. On the other hand, employees in MNEs headquartered or subsidiaries operating in Germany reported more often to be actively involved in regional initiatives. This raises questions, with important policy and management implications, on whether the lower awareness of employees in UK

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operating companies arises as a consequence of weak communication within the firm or of weaker systemic tights within the region.29 4.3

NETWORK CAPITAL

In our analysis we identify three key dimensions of Network Capital Investment in MNEs, related to the (1) identification of partners; (2) the creation and exchange of knowledge; and (3) the support of continuous collaboration capacity. The mechanisms and rationale differ by the nature of the collaborator: whilst industrial collaborations tend to occur mostly in applied research, and their value is thus more closely related to the market, collaborations with academic partners occur in basic research and are sought to explore completely novel ideas. For these reasons we separate the analysis between Industrial and Scientific Network Capital. Sectoral differences are also relevant and mostly arise as a consequence of the different maturity of the industry. Industrial Network Capital (1) Identification of Industrial Collaboration Partners - Establishing Knowledge Networks: A key dimension of network capital is expressed by the capability of the MNE to identify and select potential partners, to know where external know-how can be accessed, what skills a potential partner offers and what market such skills are most suitable to. Based on our interviews we identify two types of sources for the selection of potential research collaborators: those internal to the MNE and those external. The multinational itself provides the first internal avenue to select potential partners: not only R&D centres in the headquarters, in other branches and in subsidiaries are obvious and common options for collaborations, but, in certain cases, the R&D facilities of the parent company act as a “repository” of network capital by guiding subsidiaries in the choice of research partners within and beyond the corporate boundaries. As for external sources of partnerships, these can be found with competitors, customers and suppliers or contract research organizations, with patterns varying across the type of project and the industry. Specifically, in the automotive industry buyer-supplier collaborations are especially common, MNEs in the pharmaceutical industry collaborate often with biotech companies (see paragraph below for more insights) or with contract-research 29

Such difference deserves further investigation and validation as they might be due to a bias of the sampled interviewees.

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organisation and among ICT firms, R&D projects are often run with customers or competitors. The identification of these collaborators relies on active and constant participation to industry activities (conferences, publications, innovation competitions) and organisations (industry boards). Although partnering options are scanned on a national and, even more global level, a regional environment rich of industrial partners, is critical to support networking activity. In fact, MNEs located in the South East of England and in the Munich and Karlsruhe regions in Germany have stated that the presence of competitors, clients and knowledge intensive business services (KIBS) allows for horizontal, cross-sectoral or vertical interactive modes of innovation.

Our interviews show that, when selecting and establishing partnerships sectoral differences are extremely relevant. In the IT business-services sector, R&D networks with clients and suppliers are very common for instance in the form of strategic technology partnerships or end-users/customer projects. On the other hand, collaborations in the pharmaceutical industry tend to be mostly with bio-tech companies and seldom with direct competitors. For instance, one German MNE from the pharmaceutical industry reported that network formation with bio-tech companies is actively and systematically supported through regular partnering events (such as programs of lectures, expert discussions and company presentations) enabling bio-tech and pharmaceutical firms, as well as investors and research institutes to identify strategic partners directly. When collaborations with direct competitors do arise, this is to reduce individual costs and risks related to high capital intensive product development processes. Finally, (large) MNEs in the automotive sector actively source external knowledge from development partners/suppliers, for instance by establishing supplier parks.30

(2) Knowledge Creation and Diffusion - Capacity to Produce Knowledge in Networks and Create Value from Networks: The type of processes through which knowledge is exchanged in networks differs depending on the stage of product development and the nature of the partner. Generally speaking, two types of industrial collaboration can be identified: firstly technology partnerships, which focus primarily 30

Supplier parks in the automotive industry are defined as a confined area in proximity to the plant of automotive assemblers (OEMs) which include buildings and transport infrastructure built in order to serve the assembly-plant and suppliers.

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on early-stage R&D at the pre-competitive level; secondly product specific collaborations, which focus on later stages of the product/service development processes. These collaborations can either be bilateral or multilateral (as, for instance in joint EU-projects involving both academic and industrial members) and, as seen in the organisational capital section, are generally supported and coordinated through dedicated MNEs’ departments. Generally, industrial partnerships are highly formalised through clear milestones, deliverable lists and participation of the higher level management. In pre-competitive research, a shared research agenda, accompanied by shared facilities and personnel mobility are the most used mechanisms to promote knowledge flows. Extra-firm knowledge inflows for early-stage research and product development are additionally generated via supplier or customer innovation workshops, thereby closely integrating core competencies (when interacting with suppliers) or indepth insights on market needs (when interacting with customers). Collaboration relationships in very late stages of the innovation process, which occur by purchasing of licenses or technology platforms, are, on the one hand, traditionally characterized as simple buyer-seller relationships. The investigated MNEs – particularly from the pharmaceutical and automotive sector – are also intensifying this latter type of collaboration in order to increase external knowledge inflows and absorptive capacity for R&D as well as to cut related costs and reduce risks.

(3) Continuous Collaboration Capacity: The value of a network lies particularly in the continuity of the relationship with partners as this ensures that the knowledge accumulated spills over to future collaborations. In order to support and strengthen the network capital, some of the investigated MNEs utilized specialized management teams, such as R&D alliances or R&D liaison management (see the organizational capital section for more detail). More in general, however, we identified communication and Intellectual Property Right management as crucial to support continuous collaboration capacity across industries and countries. In fact, several interviewees have highlighted that, as these departments are important to ensure clear accountability of roles and responsibilities, they contribute to prevent and/or manage conflicts that arise from IP disputes (i.e. background and specifically foreground IP) and corporate differences in culture and agenda.

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Scientific Network Capital (1) Identification of Academic Collaboration Partners: R&D collaborations with academia are highly valued and efforts are made across industries to increase them at the global as well as regional scale. Scientific partners are normally met at conferences and industry related events or - as especially stressed in the pharmaceutical industry - by active participation in the scientific community (e.g. producing and/or publishing high quality research results). These organic and mostly ad hoc methods to identify partners are, however, deemed improvable by the majority of the MNEs interviewed. Other more institutionalised processes of academic network capital extension relate to the acquisition of new firms with already established collaborations (e.g. university spinoffs) or (temporary) institutional cross-moves from industry to science and vice versa.

One of the major obstacles to network formation is the lack of efficient mechanisms for academic institutions to adequately advertise their skills (so far universities rely mostly on peer reviewed publications or conference participation). As a consequence, several MNEs are trying to devise specific mechanisms to identify the strengths of universities and design a more efficient way to interact with them. For instance, a UK firm from the pharmaceutical industry employs specialized scouting groups to identify promising partners from the academia. Similarly, a German MNE also from the pharmaceutical sector reported close interaction with patent exploitation offices (being either privately or publicly/university owned). Furthermore, own venture capital units have been implemented, especially in the ICT and pharmaceutical industry, as a means of systematically identifying qualified collaboration partners from scientific institutions.

(2) Knowledge Creation and Diffusion - Capacity to Produce Knowledge in Networks and Create Value from Networks: Collaboration with universities and research institutes are in most cases at the very early stage of the innovation stream (blue sky). In other words, universities act as a filter mechanism for the MNE to identify new targets as well as to validate and evaluate whether an idea has commercial potential. In doing so, these collaborations help the MNE to develop a basic understanding of new research findings and strengthen its absorptive capacity by reintegrating these findings into the intra-firm R&D network. Additionally, one of the

34


investigated UK-owned pharmaceutical MNEs operating in Germany established a research advisory board, composed by selected senior academics from leading universities, to assure high level scientific-management decisions (such as clinical study protocols). This advisory board provides another important means of knowledge inflow from academic partners to the MNE, at the same time strengthening its network capital.

As has been reported in the section on human capital, another major motivation for MNE collaboration with academic partners is early access to human capital, including the possibility to support talent creation. Sustaining such a process requires strong connections of the university/research institute with the firm, which are most commonly achieved through continuous single research contracts, shared facilities, PhD funding, access to industrial data and, less often, by sponsoring professorships and through in kind donations of instruments to departments. Publicly funded, joint research projects (such as the projects funded under the EU framework programs) are another interesting mode of collaboration most of the analyzed MNEs were involved in. In such projects, the inflow of complementary knowledge from a range of industrial and academic partners was reported to be beneficial over and beyond the actual financial R&D incentive.

(3) Continuous Collaboration Capacity: As for industrial collaborations, cultural differences, legal issues and the synchronization of expectations are the main obstacles to successful collaborations (compare findings of SCHARTINGER et al., 2001; BROSTRÖM and LÖÖF, 2006; LESTER, 2007). All the MNEs interviewed reported, to different extents, difficulties in engaging with the academic community, mostly related to its partial understanding of business and industrial R&D processes, (including its legal requirements) and to the differences in professional incentive structures. As of the latter, two issues were reported, across sectors, to be occasionally of obstacles: firstly academic publication needs might interfere with confidentiality protocols, secondly universities’ specific funding requirements could not always be met by MNEs. For instance, one of the ICT companies operating in the UK, found it problematic to collaborate with universities when firms’ projects were too short to accommodate a PhD degree, which requires a three years finance stream. To overcome the differences in incentive structures, collaboration programmes with universities are often led by managers with a strong academic background, usually a 35


PhD graduate. Moreover, such programmes try to incorporate traditional academic incentives by, for instance, facilitating peer review publishing (as reported by several MNEs in both the UK and Germany across sectors). As for industrial collaborations, IPR management is also critical in academic collaborations, especially concerning joint IP and the temporary exclusion of competitors from the created knowledge. Finally, it is acknowledge that continuity in the relationship ensures successful collaborations and although partnerships are firstly developed ad hoc, this is done with the long term view of establishing a durable contact (e.g. via master agreements). To that purpose funding streams are, in some cases deliberately distributed over time to the same university, rather than on a one-off basis, to stimulate a long-lasting links.

Regional Dimension By regional network capital we refer to the capacity of the regional actors to engage with each other to exploit the advantages of physical proximity for knowledge transfer, creation and accumulation. On the one hand MNEs can be active in promoting regional networks; on the other, they might be just participants and recipients of other regional initiatives. Mechanisms in both directions are explored below.

(1) MNEs contributions to Regional Networks: Although knowledge flows occur more easily within geographical proximity, MNEs are not spatially constrained in their choice of partners and indeed, in the majority of cases, do not explicitly differentiate among regional and global collaborators. Nevertheless the need of spatial proximity in specific types of collaborations has strongly influenced, if not driven, the R&D investment strategy of some MNEs. Those firms with a decentralised R&D infrastructure (as described in the organisational capital section), have in fact devised their strategy on the basis of the local availability of a critical mass of other innovative public and private actors. In fact, they built research facilities in different areas across the world in close proximity to local universities and research centres. For instance, one of the firms in the ICT sector effectively based its R&D centres inside outstanding engineering university campuses worldwide in order to access regional accumulated knowledge, e.g. developing joint PhD programs with the university. In so doing it has institutionalised and made permanent pre-existing R&D relationships. Other firms, both headquarters and subsidiaries, across sectors and countries, have invested in science parks (e.g. supplier parks, partner ports) close to their major R&D location, to benefit 36


from local knowledge and/or established strategic research partnerships with topuniversities. As reported by one MNE from the ICT sector, future opportunities for regional network creation are also seen in fostering spin-outs or start-ups. In these cases, MNEs use created IP which that does not match with their core competencies to increase their own absorptive capacity by effectively monitoring the frontier of technological progress. Furthermore, MNEs can act as global antennas opening up international networks and knowledge inflows for SMEs in the region. For instance, as reported by one MNE of the ICT sector, both in its German and UK facilities, involving regional SMEs (and potential customers) in innovative product developments, such as technology or service delivery platforms, would particularly enable the local system to access global markets.

(2) Regional Networks involving MNEs: As MNEs are not necessarily engaged in regional networks in order to exploit spatial knowledge flows, other institutions with a specific regional mandate need be in place to support such processes. In the UK and Germany several organisations, some of which have been mentioned previously in the text, carry out these tasks. Many of the interviewed MNEs have taken part in regional network initiatives, which broadly fall in two categories: (1) activities financing R&D collaborations among regional actors, which include funding streams from national governments or the EU and (2) activities aimed at creating networks, across regional actors, with the specific aim of exchanging knowledge. In the UK these include, for example, sectoral Knowledge Transfer Networks (where Regional Development Agencies have a strong involvement) in which stakeholder can share knowledge. Similarly, some of the MNEs in Germany were, or are, actively involved in the Clusters of Excellence initiative funded by the German Federal Ministry of Education and Research.31 Other regional cluster initiatives involving SMEs and MNEs, funded by local governments, have also been reported to be interesting platforms for knowledge exchange such as the BioTOP biotech network, funded by the states of Berlin and Brandenburg in which one of the MNEs was involved. Whilst generally such initiatives are highly valued by MNEs, it was reported by several UK interviews from different sectors, that they are not easily communicated by the

31

In the Clusters of Excellence competition (“Spitzencluster-Wettbewerb”) the Federal Government promotes selected innovative clusters for a five year period and with up to 200 billion Euros.

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competent government body and that often the bureaucratic demands are onerous and discouraging.

Box 2: Regional Network Capital and MNEs Regional Initiatives fostering MNEs embeddedness through network capital The automotive industry offers several examples in which regional institutions and government bodies have fostered the creation of R&D networks increasing MNEs regional embeddedness. For instance regional network capital is enhanced through programmes which fund collaborative R&D projects such as CENEX, the Centre of Excellence for Low Carbon and Fuel Technologies, based in the East Midlands (of which one of the interviewed MNEs is a member). This is an industry-led public private partnership with the remit to promote UK competitiveness by, among other means, supporting innovative collaboration, promoting technology market adoption and supply chain development. RDAs are important actors in CENEX, for instance, Advantage West Midlands, has invested £2.5M for a research project. Another relevant initiative supported by some of RDAs is that of the Innovation Platform of Intelligent Transport Systems and Services (Innovation Platforms, are new public policy schemes intended to facilitate government and industry collaboration). One of the outcome of the Platform has been the InnovITS centre of excellence in Oxford, an institution similar to CENEX in terms of remit and functioning. Within InnovITS, one of the studied UK-owned automotive MNEs, pioneered an R&D project with a telecommunication company, therefore generating cross-industry knowledge spillovers. Both centres have influenced regional network capital also by the development of their own Knowledge Transfer Networks, through which ideas and development on the two technologies are shared across stakeholders.

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5

CONCLUSIONS AND IMPLICATIONS FOR POLICY

The aim of this paper was to analyse MNEs innovation processes and their regional embeddedness through the concepts of intangible assets, a task that had not been previously attempted in the literature on IAs. In fact, at the firm level, IAs have been mostly analysed from a business or accountancy point of view, whereas at the regional level, they have been approached mostly conceptually or only implicitly.

This paper has focused specifically on human capital, network capital and organisational capital, which have been shown by the literature to be crucial both to MNEs activities and to regional knowledge creation and spillovers.

The research has been based on over forty in-depth interviews to senior members of leading German and UK MNEs – including six headquarters and seven subsidiaries located abroad- belonging to the ICT, Automotive and Life-Science industries, which have been complemented by secondary data from corporate and specialist press. By focusing on the processes through which investment on IAs occurs, the structures that support those processes within the firm and the external connections with the regional environment, we have identified the key dimensions through which the three IAs are enhanced and contribute to the integration of the MNE into the local system.

It emerges that human, organisational and network capital have a complex multidimensional nature requiring pervasive efforts and strategies across MNEs. For instance, investment in human capital occurs by targeting individual employees (through talent management initiatives), by establishing links with leading universities providing up to date scientific knowledge - both through graduates recruitment and training - and by actively forecasting future skills demands and supply. The organisational support to innovation (organisational capital), on the other hand, rests mainly on the R&D and knowledge transfer infrastructure and on the management practices for interdisciplinary projects. Finally, we have found that the strength of network capital depends on the ability and processes to identify partners, the modes of knowledge creation and exchange among them, and the support for continuous collaboration capacity.

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The analysis shows that these three micro-level IAs, in turn, influence and are influenced by regional intangibles. As we have seen, MNEs contribute to the regional human capital by participating in local skills transfer programmes, by engaging in educational partnership with universities and, particularly in the ICT sector, by providing end-user training, thereby forming an important secondary technology transfer infrastructure. On the other hand, MNEs benefit from inter-firm mobility in highly innovative regions and from the spatial and relational proximity to local universities, from which they can access both graduates and more senior personnel as well as know-how (e.g. through contract research).

Moreover, by participating in regional governance boards, sponsoring cross-industry innovation initiatives and financing promising research or business ideas through venture capital units, MNEs can impact and integrate on regional organisational capital. At the same time, the regional governance mechanisms that support knowledge creation (such as policy incentives, cluster and networking initiatives) and, more in general, the critical mass of regional innovative actors from the business, public and academic sector, also contribute to geographically embed the firm.

Thirdly, by including local scientific and industrial partners in collaborations, MNEs increase the regional network capital, and strengthen the local absorptive capacity by providing access to global knowledge flows. More generally, MNEs can alter the attractiveness of regional networks by acting as antennas and opening up international collaboration opportunities for partners from science or industry. Correspondingly, by tapping into the regional knowledge repository and participating in locally sponsored knowledge exchange and R&D initiatives, MNEs increase their ability to connect with external partners. Table 1 summarizes the key points listed above.

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Table 1: Intangible Assets – Micro and Meso Level Dimensions

Process Dimension: Firm-level Dynamics

Impact Dimension: From the MNE to the Region

Impact Dimension: From the Region to the MNE

Human Capital

Organisational Capital Network Capital

• Talent Management and Individual Upskilling • Strategic Skills Foresight • Engagement with Higher Education • Skills Transfer Programmes • Collaborative Ties with Regional Education System • End-Users/ Supplier Training (esp. ICT) • Regional Human Capital Supply • Inter-firm Mobility

• R&D Network Infrastructure • Knowledge Transfer Structures • Management and Coordination of Interdisciplinary Projects • Cross-industry Research Initiatives • Participation in Regional Institutions • Venture Capital Units

• Regional Organizational Capacity for Innovation • Cluster & Networking Initiatives • Policy Incentives to Innovation

• Identification of partners • Knowledge Creation and Exchange • Support to continuous collaboration capacity • Systemic Innovation Capacity (Science; Industry) • Absorptive Capacity • Global Knowledge Inflow & Markets • R&D Funding for regional collaborative projects • Regional knowledge exchange initiatives

These findings not only suggest that MNEs may be deeply regionally integrated and supportive of the regional creation of intangibles, but also that the concept of IAs is itself a fruitful way to systematically analyse such an embeddedness, as it enables to distinguish between the bi-directional links from the region to the firm and vice versa.

Several directions for policy makers can be identified on the basis of our research results, which we group according to the three IA analysed:

(1) Human Capital: Investment in human capital is not only at the core of MNEs efforts to increase competitiveness, it is also found to be an urgent field of action by all the MNEs interviewed. In particular, besides more financial and infrastructural investments in the higher education sector (especially for postgraduate research in the UK), human capital formation can be supported with initiatives targeting the long term decreasing supply of scientific skills. In both countries here considered, weaker interest in scientific disciplines can undermine innovative activities in the long run. Along the same lines, especially in Germany, programs to attract and bind international students or to reduce drop-out rates in higher education are valuable options to support national and regional human capital.

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(2) Organizational Capital: Despite the overall satisfaction with the framework conditions for innovation (in Germany and the UK), our results point out several fields of essential interventions, both directly and indirectly linked to MNEs’ activities. Firstly, financial and non-financial incentives for R&D could be strengthened, not only through traditional taxation exemptions (a need especially felt in Germany) but also through new mechanisms that promote cross-industry knowledge exchange and encourage university-industry collaborations. Secondly, the availability and quality of venture capital in Europe should be increased in order to support start-ups and spin-offs and the commercialization of created intellectual property and business growth opportunities. In particular, whilst venture capital supply is commonly satisfying in premarket stages, deficits in early stage commercialization financing, need to be addressed (particularly in Germany). In this respect, efforts should be made to coordinate different potential funders, such as MNEs. Additionally, in the UK the need for a more direct and effective involvement of MNEs in initiatives promoted by local institutions and regional governments has emerged as one of the most striking country-specific feature of the case-studies here reported, calling for some reflection on the perception of global-local linkages by the UK regions. Finally, public or private patent exploitation offices (e.g. at universities or research institutes) should be strengthened in order to increase the use of created IP in a more systematic manner.

(3) Network Capital: Despite relatively high degree of territorial embeddedness of MNEs in the regions where they are operating, our analysis shows that there is large scope to increase the synergies between firms and other local actors – disclosing valuable policy options especially for regional policy makers. It emerged clearly from our interviews that the channels of communication of MNEs with other actors can be strongly improved. For instance, multinational firms are only partially aware of local R&D and knowledge transfer initiatives funded by government bodies, particularly in the UK. Similarly, there is a high demand for adequate fora for industry to interact better with academia both to identify their pools of excellence and to reduce cultural barriers. In this respect, supporting temporary institutional moves from academia to industry (i.e cross-move programmes), bears good prospects to facilitate universityindustry linkages for knowledge creation and diffusion. Likewise, fostering the creation of regional partnering organizations – which are common in the pharmaceutical sector – in other industries, seems also a relevant option. Finally, network capital can be 42


strengthened by facilitating and increasing the scope of early-stage face to face interaction in publicly funded research consortia, such as those funded by the European Commission.

To conclude, the limitations of this study should be addressed. Empirically, the study had an explorative character, making use of qualitative evidence which, in future research, should be complemented with quantitative analysis. This would allow, for instance, a more detailed comparative investigation of the weaker regional engagement of MNEs operating in the UK than in Germany. From a theoretical point of view, the analysis has covered only three intangible assets and future research should be extended to other IAs, such as social or entrepreneurship capital. Moreover, IAs and the regional/global integration of other actors (such as universities or local government bodies) could be studied through the same methods. Ultimately, these different extensions should lead towards a holistic conceptualization of intangible assets and a framework to interpret regional innovative processes.

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APPENDIX Interview Guides (1) General Management Part A - Innovation strategy •

Introduction: In an international perspective, how do you perceive the “innovation potential” of Germany/the UK as a business location?

•

As an internationally operating company: how do you organize international innovation projects? (organizational, spatial) o To what extent does your company strategically and systematically search for external information with relevance to innovation projects? o Where do you obtain information for your innovations? (e.g. use of lead user competencies, home market competitors, suppliers) o

Who primarily coordinates innovation activities in your company? (i.e. allocation of decision rights & coordination mechanisms)

o What are the main motives for international generation of innovation? •

What is the role of regional innovation potentials (i.e. RIS) in your company’s innovation strategy? o How important are aspects such as face to face contacts, frequent & ad hoc personal meetings (etc.) in your company’s innovation processes? (i.e. what is the role of geographical proximity)

o For which part of the innovation process is geographic proximity especially relevant? (exchange of market information, development of new ideas, conceptual work, development of prototypes, pilot application, introduction to market) •

Closely linked – what is the role of internationalization of R&D to your company? o What is the overall structure of the R&D labs in your company? o Where does your company conduct R&D? (e.g. at this location, headquarter, central R&D lab, external partner)

o How has its structure evolved over time? o What is the role of external partners in your company’s R&D process? Where are the most important co-operation partners localized regionally?

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•

In this context – what is the role of intangible assets to your company’s strategy/strategy making? (e.g. human capital, organizational capital, relational capital) o Are you using “intangible assets valuation reports”? o Do you perceive regional location factors – such as human capital & labor market, locational capital such as government R&D incentives, legal framework - as intangible assets that enhance competitive advantage? o How does this influence strategy making?

Part B - Regional Business Environment (locational capital) •

Generally speaking, what are the most relevant regional location factors when planning a new site for a) production and b) R&D? (critical success factors) o What specific location requirements does your company have? o How would you describe an “attractive location” for innovation? o Please compare the relevance of hard (tangible) and soft (intangible) location factors (e.g. infrastructure vs. localized accumulated knowledge). How did their role change over time?

•

Looking at this location: What are the major strengths and weaknesses of this location? (competitiveness of location: labor market, competitive environment, political framework conditions/ regulations; today)

o How did they develop over time? o What was the impact of changes in the regional business environment on your company’s operations at this location? •

How does your company influence the regional framework conditions for its operations? (e.g. improved practices such as processes, technological base, organization, labor use/skills, vision, creativity, quality + infrastructure)

o investment in local, e.g. cluster & industry specific, infrastructure o Does your company have a specific regional strategy? What are the main characteristics of this strategy? (e.g. regional collaboration with scientific institutions, local sourcing, CSR) •

How would you assess the following framework conditions for innovation activities in this region?: (e.g. on a scale from 1-6, 1 being = excellent)

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o __ availability of qualified employees (in scientific & technical fields) o __ capacity of the science base (universities, public & private research institutes) o __ willingness to cooperate (companies, scientific institutions) o

__ government R&D incentives (e.g. R&D expenditure, corporation tax rate)

o __ overall innovation climate o __ availability of suitable customers o __ availability of suitable suppliers o __ government bureaucracy o __ legal framework conditions (e.g. processing time of authorization procedures) •

Which regional factors are promoting, which factors are hampering innovation activities? (e.g. cost, knowledge, institutional; list)

Part C - Future Competitiveness •

Corporate Governance: From all we have talked about - how should corporate governance evolve in order to take full advantage of the regional opportunities? (e.g. concerning collaboration, autonomy of sites, regional networks).

•

What should be done by policy makers to increase the competitiveness of this location? (e.g. institutional, regulation, cost structures, education; see above as well)

•

What should other regional stakeholders do in order to strengthen the regional competitiveness/positioning?

(2) Research and Development A. Innovation Activities • •

Introduction: In an international perspective, how do you perceive the competitiveness of Germany/the UK as a “location for innovation”? Which R&D functions are conducted at this site? (basic research, applied research, product/process innovations or development)

o i.e. what is the role of this location in the corporate R&D network? o Why are exactly those functions located here? What were the motives for selecting this location for R&D operations? (past) o Have these functions changed/evolved over time? o What is the no. & qualification of R&D personnel at this location?

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•

What is the overall structure of the R&D labs in your company? o How many R&D locations does your company have? o How has the overall structure evolved over time? o Where are central decisions on R&D planning and budget being made? (higher degree of autonomy = likely generate links with local actors/academic institution)

•

How do you coordinate international R&D efforts? (organizational modes for learning & innovation; knowledge transfer; transfer of intangible assets)

o Could you please explain – using a typical R&D project as an example – how you coordinate internal R&D efforts? (organizational structures, spatial & organizational division of labor, intensity of interaction/face to face)

o Especially, how are you organizing internal R&D projects in terms of knowledge transfer from other locations, personnel mobility etc.? (knowledge management) •

What are critical sources for product and/or process innovation (ranking): o __ own R&D o __ market analysis o __ qualified employees o __ external co-operation o __ experience o __ use of new input material/products o (__ process innovation) o __ purchasing technologies (e.g. licences)

B. External Collaboration Activities Science Collaboration (modes of cooperation, patterns of interaction) • Do you have collaboration partnerships with research institutes (public/private), universities and/or research centers? If so, why do you co-operate with them?

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•

In which part of the innovation process do you collaborate most intensively with scientific partners? (basic exchange of know-how, development of new ideas, conceptual design, development of prototypes, pilot applications, market launch) o

How do you coordinate external collaboration activities? (regional, intern.; supplementary structures/coordination approaches: personal meetings, shared facilities, conference calls etc.)

o How important are aspects such as face to face contacts, frequent & ad hoc personal meetings (etc.) in your cooperation relationships? (i.e. what is the role of geographical proximity) o

What organizational structures are most conducive to R&D success? (e.g. project based, permanent etc.; “alliance research” in pharmaceutical industry, cross-licensing of patents)

o

Please quantify the outcome of science collaboration projects (e.g. no. of patents or publication in partnership with external partners)

•

Where are your most important scientific cooperation partners localized? (international, national, regional; related to research & recruitment of personnel)

•

How do you usually find scientific collaboration partners? o What is the role of personal scientific networks for R&D co-operations with scientific institutions? o What role does spatial proximity play in this context? (other aspects e.g. organizational, relational, institutional proximity)

•

What is the nature of relationship with local universities & the research community? (How do MNEs tap into foreign academic knowledge base and scientific labor?) o

How would you characterize the interaction of your company with external R&D partners? (quality of interaction: e.g. formal-informal, personalanonymous, permanent-changing, trust-control)

o

•

What are the main a) motives and b) modes for collaboration? (access external knowledge for R&D, search for new scientific knowledge, access to sophisticated resources; research projects, PhD/Masters thesis, human capital recruiting)

What problems exist concerning R&D/scientific co-operations? (e.g. intellectual property rights, willingness to co-operate, quality of regional co-operation partners)

•

Are you planning to increase the intensity of collaboration with local scientific partners in the near future? (e.g. R&D intensity: “own R&D” vs. “R&D in networks”) o E.g. Outsourcing of R&D to university, private/public research institutes as way of accessing knowledge?

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Industry Collaboration • Do you have industry collaboration partners? If so, with whom do you co-operate and why? o

E.g. suppliers, customers, competitors (please specify)

o Do you have any formal co-operative agreements? (e.g. are you part of strategic alliances or technological alliances?; international/regional) •

In which part of the innovation process do you collaborate most intensively with industrial partners? (basic exchange of know-how, development of new ideas, conceptual design, development of prototypes, pilot applications, market launch) o

How do you coordinate external collaboration activities? (regional/domestic, international; supplementary structures/coordination approaches: personal meetings, shared facilities, conference calls etc.)

o How important are aspects such as face to face contacts, frequent & ad hoc personal meetings (etc.) in cooperation relationships? (i.e. what is the role of geographical proximity) o

Which organizational structures are most conducive to R&D success? (e.g. VW’s organization housing independent suppliers/assemblers under single roof)

o

Please quantify the outcome of industry collaboration projects (e.g. no. of patents or publication in partnership with external partners)

•

Where are your most important industry cooperation partners localized? (international, national, regional)

•

How do you usually find industrial collaboration partners? (e.g. strategic approaches for linkage creation with relevance for R&D)

•

What problems exist concerning R&D/industrial co-operations? (e.g. institutional, intellectual property rights, willingness to co-operate, quality of regional co-operation partners)

•

Are you planning to increase the intensity of collaboration with local industrial partners in the near future?

C. Regional Business Environment •

What are the major strengths and weaknesses of this location? (competitiveness of location: labor market, competitive environment, political framework conditions/ regulations; today)

•

How does your company influence the regional framework conditions for R&D operations? o i.e. via investments in infrastructure, supply of venture capital, endowed professorships, development of start-up/spin-out companies o Does your company apply a specific regional strategy? (e.g. regional collaboration with scientific institutions, local sourcing, external network, CSR)

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•

How would you assess the following framework conditions for innovation activities in this region?: (on a scale from 1-6, with 1 being excellent) o

__ availability of qualified employees (in scientific & technical fields)

o

__ capacity of the science base (universities, public & private research institutes)

o

__ willingness to cooperate (companies, scientific institutions)

o __ (public) promotion of business & technology development o __ overall innovation climate o __ availability of suitable customers o __ availability of suitable suppliers o __ government bureaucracy o •

Please name three top locations which would be attractive for you company’s operations.

Which regional factors are promoting, which factors are hampering innovation activities? (e.g. cost, knowledge, institutional; list)

D. Future Competitiveness •


•

What should be done by policy makers to increase the competitiveness of this location? (e.g. institutional, regulation, cost structures, education; see above as well)

•

What should other regional actors do in order to strengthen the regional competitiveness/ positioning?

(3) Production Part A – Organizational Capital • Introduction: In an international perspective, how do you perceive the competitiveness of Germany/the UK as a “location for innovation”? Introducing Questions • Which production functions are conducted at this site? o i.e. what is the role of this location in the corporate production network? o

Why are exactly those functions located here? What were the motives for selecting this location for production? (past)

o Have these functions changed/evolved over time? •

What is the no. & qualification of personnel at this location?

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Geographical dispersion of production units & decision rights • What is the overall structure of the production sites of your company? (from globally concentrated production, host-market production, product specialization, transnational vertical integration)

o How many production locations does your company have? o •

How has the overall structure evolved over time?

Where are central decisions on production planning and budget being made? (“full rights” to “done elsewhere”; higher degree of autonomy = impact MNEs involvement (production) o i.e. where are the responsibilities for undertaking product development activities located? (product mandate?)

Interconnection of R&D & production • Is there an associated or locally integrated R&D lab at this location? • What type of research and development is conducted at this location? o E.g. design & development of new products, modification & upgrading of existing products, adaptation of products for local market • How closely are R&D and production intertwined organizationally & spatially? (integrated product development processes /system integration of R&D & production) o

Could you please explain – using a typical R&D-production project as an example – how you internally coordinate these innovation efforts? (organizational structures, spatial & organizational division of labor, intensity of interaction/face to face)

o

What kind of knowledge management system is your company utilizing in order to use & exchange information/knowledge/skills within your company? (e.g. intranet systems/best practices/lessons learnt; inward orientation in acquisition of knowledge)

o

Specifically, in this knowledge management process - how do you integrate different department or activities? (focus: inputs such as knowledge, skills; management structures)

•

What are critical sources for product and/or process innovation (ranking): o __ own R&D o __ market analysis o __ qualified employees o __ external co-operation o __ experience o __ use of new input material/products o (__ process innovation) o __ purchasing technologies (e.g. licences)

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Part B – Market capital (i.e. market & trade relationships; network capital) Industry Collaboration for Innovation • Generally speaking, how important are external partners for the acquisition of new knowledge? • Do you have industry collaboration partners for innovation? If so, with whom do you co-operate and why? o

o

Please indicate the type of co-operation partner* (supplier, system supplier, module supplier, competitors, customers, other enterprises within own enterprise group) Do you have any formal co-operative agreements? (e.g. are you part of strategic alliances or technological alliances?; international/regional)

---*Specific Questions depending on Type of Co-Operation Partner: a) Suppliers & Competitors: Outsourcing & subcontracting (Inter-firm networks) • What is the role a) of subcontracting and b) outsourcing to suppliers/competitors for your company’s production operations and with whom do you co-operate? (subcontracting system?) • Where are your most important subcontracting/outsourcing partners localized? (international, national, regional) o

Please characterize your companies most important regional subcontracting partners for production activities (sector, location, size, name; form of co-operation)

What are the costs & benefits of subcontracting/outsourcing? Specifically, what is the role of subcontracting to your company’s innovation activities? o

• •

In which part of the innovation process do you collaborate most intensively with suppliers/competitors? (basic exchange of know-how, development of new ideas, conceptual design, development of prototypes, pilot applications, market launch) o

How do you coordinate external collaboration activities? (regional, international; supplementary structures/coordination approaches: personal meetings, shared facilities, conference calls etc.)

o

How important are aspects such as face to face contacts, frequent & ad hoc personal meetings (etc.) in cooperation relationships? (i.e. what is the role of geographical proximity)

o

Which organizational structures are most conducive to collaboration success? (e.g. VW’s organization housing independent suppliers/assemblers under single roof)

•

What is the impact of suppliers/competitors on innovation processes and acquisition of outward knowledge? (product/technology development, production organization, process innovation)

•

What problems exist concerning industrial co-operations? (e.g. institutional, intellectual property rights, willingness to co-operate, quality of regional co-operation partners)

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b) Suppliers: Global vs. Local Sourcing • Please compare the role of global sourcing vs. local sourcing to your production activities at this location? • Focussing on local sourcing: what are the central parameters of decision making to source locally? (cost, quality, reliability, flexibility, proximity=>risk reduction, capacityadjustment, JIT, trust/f2f) o How has the role of local sourcing developed over time? (i.e. process of linkage formation and linkage potential)

o What is the estimated percentage of local content of production and where are your most important sourcing partners localized? (internal: in industrialized economies approx. 10-20% of inputs sourced locally) o

What is the impact of your suppliers on aspects such as product/ technology development, production organization (process innovation)?

c) Lead User (Customers) • What is the role of lead users/key accounts in your company’s innovation process? (Competence enhancing customers?) o i.e. are user-producer linkages of importance in your company’s innovation process? • Where are your most important customers (lead user/key accounts) located? o Please characterize your companies most important regional customer regarding innovation activities (sector, location, size, name; form of cooperation) •

In which part of the innovation process do you collaborate most intensively with customers & with whom? (basic exchange of know-how, development of new ideas, conceptual design, development of prototypes, pilot applications, market launch) o

How do you coordinate external collaboration activities? (regional, international; supplementary structures: personal meetings, shared facilities, conference calls)

o

How important are aspects such as face to face contacts, frequent & ad hoc personal meetings (etc.) in cooperation relationships? (i.e. what is the role of geographical proximity)

o

Which organizational structures are most conducive to collaboration success? (e.g. VW’s organization housing independent suppliers/assemblers under single roof)

•

What is the impact of customers on innovation processes and acquisition of outward knowledge? (product/technology development, production organization, process innovation)

•

What problems exist concerning co-operations with customers? (e.g. institutional, intellectual property rights, willingness to co-operate, quality of regional co-operation partners)

Part C – Locational Capital (Regional Business Environment): •

What are the major strengths and weaknesses of this location? (competitiveness of location: labor market, competitive environment, political framework conditions/ regulations; today)

59


•

How does your company influence the regional framework conditions for your operations? o i.e. via investments in infrastructure, supply of venture capital, endowed professorships, development of start-up/spin-out companies o

Does your company apply a specific regional strategy? (e.g. regional collaboration with scientific institutions, local sourcing, external network, CSR)

o If not, why? •

How would you assess the following framework conditions for innovation activities in this region?: (on a scale from 1-6, with 1 being excellent) o __ availability of qualified employees (in scientific & technical fields) o

__ capacity of the science base (universities, public & private research institutes)

o

__ willingness to cooperate (companies, scientific institutions)

o __ (public) promotion of business & technology development o __ availability of suitable customers o __ availability of suitable suppliers o __ government bureaucracy o __ communications infrastructure o __ quality of traffic infrastructure o Please name three top locations which would be attractive for you company’s operations. •

Which regional factors are promoting, which factors are hampering innovation activities? (e.g. cost factors, knowledge factors, institutional; list)

Part D - Future Competitiveness •


•

What should be done by policy makers to increase the competitiveness of this location? (e.g. institutional, regulation, cost structures, education; see above)

•

What should other regional actors do in order to strengthen the regional competitiveness/ positioning?

(4) Human Resources A. Human Resources Strategy •

Introduction: In an international perspective, how do you perceive the competitiveness of this location regarding a) availability and b) quality of highly qualified employees?

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Recruitment Strategy • What is the number of a) new graduates and b) external/experienced employees hired per year? (by scientific field, qualification, location; inflow of knowledge) •

Which channels is your company using to recruit new employees for your company? o

i.e. what kind of recruiting strategies/approaches is your company using? (e.g. recruitment fairs, online recruitment platforms, co-operations with local universities etc.)

o Which of these recruiting strategies is most successful? o Has the role of the one of the mentioned strategies changed over the last years? •

Where are most of your new employees coming from? (institutional & geographical) o Are there typical (spatial) patterns of recruitment? o What is the role of this location in “human capital supply”? (e.g. importance of recruiting local scientific personnel?)

Intra-firm mobility • What is the role of intra-firm mobility in your company? o Is intra-firm mobility becoming more important to the competitiveness of your company? If so, why? o Does your firm offer “International exchange programs” to promote intra-firm mobility? (spatial: international management programs; organizational: cross-move programs)

Inter-firm mobility • What is the yearly labor turnover rate? (no. of people leaving company, no. of new entrants) o

Where are the new employees coming from (location; sectors, companies)

o

Where are the people, that are leaving you, going? (esp. other companies, spin-outs etc.)

o

Please compare the competence of people who left the company with those of the new recruits? (idea: “competence turnover”?)

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Employee Qualification & Development • What is the composition of your company’s labour force regarding educational level and positions held in the company? (i.e. human capital; creative components) o

What is – approximately – the percentage of HR in science & technology fields? (what is the no. of doctoral students?)

o What is – approximately – the percentage of HR in management functions? Overall, what is the role of “competence development” and how has its relevance changed over time? (Please describe the goals and target groups)

Formalized Human Resources Programs (internal perspective) Does your company have formalized human resource development programs? • What kind of formalized human resources development programs is your company offering? o

e.g. graduate programs (for talent development), own universities (see e.g. Continental Universities)

o

What is the number of a) “internally organized training units” and b) “externally organized training units”? (no. of days or training cost as % of turnover)

o In the case of “externally organized training units” – where are your company’s cooperation partners localized? •

In this context (formalized human resource development): please elaborate on the role of knowledge transfer & knowledge management (local-global)

Education & Qualification Networks (external perspective) •

What is the number of co-operations in teaching & education your company has and with whom are you working? o In which educational/scientific fields are those co-operation partners? (e.g. management, engineering, natural sciences etc.)

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•

What kind of formal partnership/collaboration programs does your company have? (including number & specialization); e.g.: o Bachelor programs with local universities or local business-academies o University - Alumni program & sponsorships for a specific chairs or university o

Doctoral research training groups (temporary exchange; e.g. attached to own R&D labs)

o Sponsored professorships at universities o

funding of co-operation projects (e.g. in research)

o funding of university-company research centers o Others, e.g.: Scholarships, student programs, student trainees, dissertations •

What are the most relevant motives for your company to collaborate with universities and other educational institutions and invest into partnerships? (goals & strategy)

•

Where are the most important education-related cooperation partners located? (international, national, regional) o

Please characterize your most important cooperation partners (type of cooperation partner)

o

Please characterize your most important regional cooperation partners (type of cooperation partner, location, nature of cooperation)

o How important are aspects such as face to face contacts, frequent & ad hoc personal meetings (etc.) in cooperation relationships? (i.e. what is the role of geographical proximity) •

How would you characterize the nature of interaction of your company with external educational partners? (quality of interaction: formal-informal, personal-anonymous, permanent-changing, trust-control) o

What is the nature of relationships with local universities (e.g. “collegial players vs. aggressive/targeted players”)

o

•

In this context: what is the role of university-relationship management (URM) and how has it evolved over time?

Are you planning to increase the intensity of collaboration with local educational/scientific partners in the near future?

B. Regional Knowledge Assets (location) •

What are the relative strengths of the regional labor markets? (regional knowledge assets) o

What are the major strengths and weaknesses of this location? (competitiveness of location - labor market, political framework conditions/regulations)

o

How relevant is this to your company’s operations at this location?

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•

Specifically - how would you assess (using a scale from 1-6 with 1 being the best): o

A) the availability of qualified employees? (esp. in scientific & technical fields; local labor pool existing?)

o

B) the capacity of the education/science base (universities, schools of applied sciences, business schools, public or private research institutes)

o

•

Please name three top locations which would be attractive for you company’s operations.

Which regional factors are promoting, which factors are hampering your companies operations at this site? (e.g. cost, knowledge, institutional; list)

C. Future Competitiveness •

Corporate Governance: From all we have talked about - how should corporate governance evolve in order to take full advantage of the regional opportunities? (e.g. concerning collaboration, education investments etc.).

•

What should be done by policy makers to increase the competitiveness of this location? (especially looking at “adequacy” of intangible investments, e.g. in education)

•

What should other regional stakeholder do in order to strengthen the regional competitiveness/ positioning?

(5) Corporate Communication Part A – Innovation Strategy & Organizational Capital •


International Organization of R&D •

Generally: What is the role of internationalization of R&D to your company? o What are the main motives for international generation of innovation? o How would you characterize your company’s innovation strategy in comparison with the relevant competitors?

Spatial Structure of R&D Network and Decision Making Authority •

What is the overall structure of the R&D labs in your company? o How many R&D locations does your company have? o How has the overall structure evolved over time? o Where are central decisions on R&D planning and budget being made? (higher degree of autonomy = likely generate links with local actors/academic institution)

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Part B - External Collaboration Activities (Network Capital) Communication and External Collaboration Activities • What is the role of the communication departments in partnerships and interactions with the following actors (Clients, Suppliers Scientific/Technological collaborators including universities? Policy Makers (National, Sub National, and International)

•

For each of the above: at what stages of partnerships is the role of the communication department more important?

Innovative activities and Collaborations • What is the role of the communication department in innovative activities and collaborations? (Conferences, Workshops, Briefs) • •

At what stages of the process is it more important? (Early stages, launch) What organisational structures are more conducive to success? (e.g. project based, permanent etc.)

•

What problems do you encounter when dealing with communications of innovative aspects?

•

What are the characteristics of a location that make the communication process more easy/more difficult? (Vicinity to other firms, policy makers, clients, conference facilities)

Science Collaboration (modes of cooperation, patterns of interaction) • Do you have collaboration partnerships with research institutes (public/private), universities and/or research centers? If so, why do you co-operate with them? •

Where are your most important scientific cooperation partners localized? (international, national, regional; related to research & recruitment of personnel)

•

How do you usually find scientific collaboration partners? o What is the role of personal scientific networks for R&D co-operations with scientific institutions? o

What role does spatial proximity play in this context? (other aspects e.g. organizational, relational, institutional proximity)

o What are the main a) motives and b) modes for collaboration? (access external knowledge for R&D, search for new scientific knowledge, access to sophisticated resources; research projects, PhD/Masters thesis, human capital recruiting) •

What problems exist concerning R&D/scientific co-operations? (e.g. intellectual property rights, willingness to co-operate, quality of regional co-operation partners)

•

Are you planning to increase the intensity of collaboration with local scientific partners in the near future? (e.g. R&D intensity: “own R&D” vs. “R&D in networks”)

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Industry Collaboration • Do you have industry collaboration partners? If so, with whom do you co-operate and why? (e.g. suppliers, customers, competitors, please specify) o

Do you have any formal co-operative agreements? (e.g. are you part of strategic alliances or technological alliances?; international/regional)

o Where are your most important industry cooperation partners localized? (international, national, regional) •

How do you usually find industrial collaboration partners? (e.g. strategic approaches for linkage creation with relevance for R&D)

•

What problems exist concerning R&D/industrial co-operations? (e.g. institutional, intellectual property rights, willingness to co-operate, quality of regional co-operation partners)

•

Are you planning to increase the intensity of collaboration with local industrial partners in the near future?

Part C - Human Resources Strategy •

Introduction: In an international perspective, how do you perceive the competitiveness of this location regarding a) availability and b) quality of highly qualified employees?

Recruitment Strategy • What is the number of a) new graduates and b) external/experienced employees hired per year? (by scientific field, qualification, location; inflow of knowledge) •

Which channels is your company using to recruit new employees for your company? o

i.e. what kind of recruiting strategies/approaches is your company using? (e.g. recruitment fairs, online recruitment platforms, co-operations with local universities etc.)

o Which of these recruiting strategies is most successful? o Has the role of the one of the mentioned strategies changed over the last years? •

Where are most of your new employees coming from? (institutional & geographical) o Are there typical (spatial) patterns of recruitment? o

What is the role of this location in “human capital supply”? (e.g. importance of recruiting local scientific personnel?)

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Education & Qualification Networks (external perspective) •

What is the number of co-operations in teaching & education your company has and with whom are you working? o In which educational/scientific fields are those co-operation partners? (e.g. management, engineering, natural sciences etc.)

•

What kind of formal partnership/collaboration programs does your company have? (including number & specialization); e.g.: o Bachelor programs with local universities or local business-academies o University - Alumni program & sponsorships for a specific chairs or university o

Doctoral research training groups (temporary exchange; e.g. attached to own R&D labs)

o Sponsored professorships at universities o

funding of co-operation projects (e.g. in research)

o funding of university-company research centers o Others, e.g.: Scholarships, student programs, student trainees, dissertations •

What are the most relevant motives for your company to collaborate with universities and other educational institutions and invest into partnerships? (goals & strategy)

•

Where are the most important education-related cooperation partners located? (international, national, regional) o

Please characterize your most important cooperation partners (type of cooperation partner)

o Please characterize your most important regional cooperation partners (type of cooperation partner, location, nature of cooperation)

o How important are aspects such as face to face contacts, frequent & ad hoc personal meetings (etc.) in cooperation relationships? (i.e. what is the role of geographical proximity) •

How would you characterize the nature of interaction of your company with external educational partners? (quality of interaction: formal-informal, personal-anonymous, permanent-changing, trust-control) o

What is the nature of relationships with local universities (e.g. “collegial players vs. aggressive/targeted players”)

o

•

In this context: what is the role of university-relationship management (URM) and how has it evolved over time?

Are you planning to increase the intensity of collaboration with local educational/scientific partners in the near future?

67


Part D - Regional Business Environment •

Generally speaking, what are the most relevant regional location factors when planning a new site for a) production and b) R&D? (critical success factors) o What specific location requirements does your company have? o How would you describe an “attractive location” for innovation? o Please compare the relevance of hard (tangible) and soft (intangible) location factors (e.g. infrastructure vs. localized accumulated knowledge). How did their role change over time?

•



Does your company have a specific regional strategy? What are the main characteristics of this strategy? (e.g. regional collaboration with scientific institutions, local sourcing, CSR)

•


Part E- Future Competitiveness •


•


•


(6) Governmental Affairs Part A – Organizational Capital •


•

What are critical matters the government affairs department of your company normally deals with in government relations? (e.g. regulation, funding, universities - for skills or research purposes, skills)

•

Can you explain me and compare how the role changes when dealing with aspects

68


that involve clients, versus suppliers versus S&T collaborators? (suppliers, clients, scientific/technological collaborators including universities; for each of the above, can you make an example in which your role was particularly important?)

•

When/Why do you interact with national, regional or international government bodies?

Part B - External Collaboration Activities (Network Capital) Communication and External Collaboration Activities • What is the role of the government affairs departments in partnerships and interactions with the following actors? (Clients, Suppliers Scientific/Technological collaborators including universities. Policy Makers (National, Sub National, and International)

•

For each of the above: at what stages of partnerships is the role of the communication department more important?

Innovative activities and Collaborations • What is the role of the communication department in innovative activities and collaborations? (Conferences, Workshops, Briefs) o What government bodies do you deal with? •

At what stages of the process is it more important? (Early stages, launch)

•

Which organisational features makes the management of collaboration processes easier/difficult (international/versus national collaborations, project based)

•

What organisational project structures are more conducive to success (project base/ ongoing partnership/partnership involving which types of other actors)

•

What is the role of face to face contact in these collaborations?

•

What problems do you encounter when managing government affairs?

•

Can you compare problems/advantages of conducting national versus international research projects?

Part C - Regional Business Environment •

Generally speaking, from a government affairs perspective - what are the most relevant regional location factors when planning a new site for a) production and b) R&D? (critical success factors) o What specific location requirements does your company have? o How would you describe an “attractive location” for innovation? o Please compare the relevance of hard (tangible) and soft (intangible) location factors (e.g. infrastructure vs. localized accumulated knowledge). How did their role change over time?

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•



Does your company have a specific regional strategy? What are the main characteristics of this strategy? (e.g. regional collaboration with scientific institutions, local sourcing)

•


Part D- Future Competitiveness •


•


•


70