Transnational firms and the changing organisation of innovative activities

It is suggested that a transition is taking place towards new modes of organising transnational corporations' innovative activities. First, different: units of multinational firms, including foreign-based subsidiaries, are increasingly involved in the generation, use and transmission of knowledge. Secondly, multinationals are developing external networks of relationships with local counterparts, through which foreign affiliates gain access to external knowledge sources and application abilities. As a result of this evolutionary process, multinationals' organisation is subject to both centripetal and centrifugal forces. Considerable efforts are then necessary to innovate coordination procedures and mechanisms, in order to enhance the generation, circulation and use of knowledge. A number of empirical works are reviewed, providing some evidence of the evolutionary process discussed in the paper.