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Innovation in risky markets: ownership and location advantages in the UK regions

Gagliardi, Luisa and Iammarino, Simona (2018) Innovation in risky markets: ownership and location advantages in the UK regions. Journal of Economic Geography, 18 (5). pp. 1177-1201. ISSN 1468-2702

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Identification Number: 10.1093/jeg/lby033

Abstract

This article analyses the relationship between firm’s perception of market risk and engagement in innovation. We conceptualise this relationship by integrating insights from the management literature on innovation barriers with those derived from the international business and economic geography perspectives on the interplay of ownership and location advantages. By exploiting a firm-level panel dataset based on the UK Innovation Survey for the period 2002–2008, we test the relationship between perception of market risk and innovation behaviour in relation to firm ownership—i.e. multinational enterprises (MNEs) versus single domestic enterprises—and location—across regional contexts characterised by different degrees of technological dynamism. Our main results show that ownership advantages operate as a moderator by fundamentally affecting the direction of the relationship: while MNEs react positively to risk perception, single domestic firms reduce their innovation engagement as a strategy to cope with market uncertainty. Yet, ownership advantages play a pivotal role only in relatively inert or stable contexts, as in technologically dynamic regions differences between domestic firms and MNEs disappear.

Item Type: Article
Official URL: https://academic.oup.com/joeg
Additional Information: © 2018 Oxford University Press
Divisions: Geography & Environment
Subjects: H Social Sciences > HB Economic Theory
JEL classification: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O31 - Innovation and Invention: Processes and Incentives
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
Sets: Departments > Geography and Environment
Date Deposited: 04 Jul 2018 14:13
Last Modified: 20 Oct 2019 00:16
Projects: ES/M008436/1
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/89059

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