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European Urban and Regional Studies
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Innovation and Knowledge Driven by a Focal Corporation

The Case of the Autoeuropa Supply Chain

Mário Vale

University of Lisbon, Portugal mario.vale{at}mail.doc.fl.ul.pt

Traditionally, transnational subsidiaries in peripheral regions were labelled ‘cathedrals in the desert’ as they did not establish significant links with local or regional producers and did not control the decisionmaking process. The work of economists and geographers has tended to be heavily influenced by the branch plant stereotype. However, this rather basic vision of reality is now changing as inward investments promoted by transnational corporations (TNCs) become more embedded in the region. It seems there is a new strategy of foreign firms in relation to local firms and institutions, as evidenced by the technological knowledge governance and learning processes in supply chains polarized by some TNC subsidiaries.

In this paper we first assess the role of technological externalities as a new industrial location factor in the era of globalization. These externalities reinforce localization of innovative firms rather than stimulate spatial dispersion. Even TNC subsidiaries are more embedded in the host regions as globalization accelerates. Second, we analyse the features of the Autoeuropa (AE) supply chain in Portugal, namely the type of suppliers (firm size, origin of capital, markets and so forth) and their position in the hierarchical supply chain of AE. Finally, we assess external knowledge and innovation driven by Autoeuropa itself among suppliers, and we discuss the main benefits as well as the basic problems of such a form of knowledge creation and diffusion.

Key Words: automobile industry • innovation • inward investment • knowledge

European Urban and Regional Studies, Vol. 11, No. 2, 124-140 (2004)
DOI: 10.1177/0969776404036252
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