The Nature and Structure of Technological Clusters - Essay Example

? Technological innovations and multinational enterprises Introduction Technological innovations has been viewed as the changes which occurs in the global society due to increased human activities and discoveries which are interrelated and not dependent in different parts of the world. Innovation are undertaken by devoting more resources into discovering new opportunities by exploitation and exploration of the existing resources .research and development is key in innovating a product as scholars and researchers have to reason together to get the correct technological specialist(Castelles, 1999). Multinational enterprises organizes themselves into clusters in order to exploit benefits within the clusters for example they have explained that international corporation spread knowledge in different economies rather than inter firm networks .Multinational enterprises are crucial actors In innovation globally and contributes greatly on knowledge based economy .technology transfer of knowledge from multinational to foreign subsidiaries is more labor productive than in local companies hence the productivity advantage of multinationals .Research and development has been internalized by decision makers in government and this has increased innovations with multinational cooperation’s have built up their sales distribution and operations base in foreign countries.(Kinchella,2001). Innovation Innovation has being defined as the ability of affirm to devote resources into innovating new areas which have not being explored and exploiting. For example he tried to explain how socializing of managers has contributed to increased integration ( Mudambi & Swift, 2012) the only Way to achieve this is by through research and Foreign direct investment is geared towards exploiting existing ownership development(R&D) actitivities to trap unutilized resources globally. Innovation can only be achieved through foreign direct investment by multinationals corporations which transfer technology and hence end up benefiting the local industries mainly from spillovers and capturing absorptive capability of potential benefits from FDI (Zhao & Zhang 2006). Environment affects innovations and adaptation of new technology and improve overtime in order to enhance technological capabilities and competitive advantage such decisions are influenced by the incentives , markets skills , capital and suppliers as well as institutions which firm interacts with . Hence innovation is an interactive process which links agent’s responds to the market and this determines the rate of generation adaptation acquisition and dissemination of technology in productive activities. Innovation has played an important role in shaping policies and how interactions and linkages between actors bring about market failures the interactions between firms and non firm sectors i.e. universities and research and development. Innovation seeks to improve and find new ways of doing things. For example, in the European union states such as Czech Republic and Hungary used protectionist policy to encourage multinational enterprises (Narula & Guimon, 2008). Foreign direct investment (FDI) is one of the most used methods to show how innovation has helped provide positive externalities into the local economies multinational companies transfer technology to the foreign subsidiaries that can be appropriated by local firms (Garcia& Huergo 2008). Technology transfer Technological clusters enable flow of local knowledge and innovations. This knowledge is tactical and involves new concepts and ideas like in research and development where innovation requires high knowledge in its creation. This enables transmitting knowledge from one person to another and increases labor productivity and specialization (Castelles, 1999). Technology is defined as a scientific knowledge of methods used to advance in how we do our daily activities in expanding growth in the host. Research and development is the only way to explore new ways of producing goods and services. To increase productivity more resources should be channeled to research and development. Innovation can only be achieved through research and technological transfer between corporation and decision makers who are actively being involved in policy making. Research and development has proved that technological transfer can be used to establish sufficiently competent and extensive structures react quickly to dynamic changes in relative location advantage hence entrepreneurial integration strategy (Krahmer & Reger, 1999). New technologies play fundamental part in making globalization possible. Hence transfer of information allows form speed and the intensity which describes new modern world. Due to technological adversement their is formation of new global village and this helps in enlargement of market and intensifications of trade (Archibugi &Iammarino, 2002)China has shown that Multinational Corporation has lead to technological transfer by indirect effects or spillover and this has increased competition, labor training and forward and backward linkages. In Spain technological transfer suggests that multinational enterprises are of importance in knowledge transfer within large firms on productivity for example companies with computer based information technologies increase their efficiency (Garcia, 2008). Process of innovation Foreign direct investment is geared towards exploiting existing ownership of multinational enterprises and augmenting firms by acquisition of new knowledge. Studies have found that from technologically lagged countries tend to invest stronger technological positions. International corporations expansions utilize assets and give them an advantage over incumbent competitors in other countries hence enable them to enter the global markets. Concentration on creation of firm’s specific assets in multinational enterprises favored research and development which implies high degree of division of labor and specialization. They explained how multinational enterprises have greatly influenced export sector in Sweden and improved firm’s outputs in the global market (Dash, Ebersberger & Loof, 2007). Many governments have drafted regulations on how to allow entry of foreign enterprises and cooperate in the view of protecting infant local enterprises ,general consideration of practical approach in need to strengthen corporation in the field of international direct investment. Cooperation between multinational and domestic enterprises reflects good practice and should be able to respect code of conducts in their operations. For example international disputes are settled through disputes settlement mechanisms including arbitration which is encouraged to facilitate resolution of legal problems arising from multinationals and the host governments (Loof 2007). The process of innovation is termed as a transition process characterized by rapid economic liberalization and massive privatization hence foreign owned multinationals become major investors in the private sector contributing to transfer of foreign knowledge. Countries must invest heavily on universities and research institutions. Technology is the methodical application of scientific knowledge to practical use and plays a crucial role in technological innovation and production strategies start with research and development to be able to identify ways of maximizing in products in the manufacturing sectors and also increase global competitiveness of their product (Garcia2008). Investing in research activities is the only process that will enable development of new products and adaptation of new technology and increasing quality of the products. The innovation process begins by establishing institutions that are specializing in adopting new knowledge useful in production, creating intellectual property right for new inventions and discoveries that can be in form of patent rights or copyright protection of software (Zhao &Zhang 2006). Research and development (R&D) R&D allows for close personal interaction which fosters the creation and transfer of tactic knowledge. Hence search and innovative performance suggests dispersal of research activities which has become deleterious. R&D is the only way to ensure there is adoption of new technology. Research on technology is valuable and enables develop better understanding of strategy and international business theory to public policy makers seeking to maximize economic performance. Universities specializing in research have shown that firms clusters to benefit from knowledge spillover. Academic research networks are able to appropriately critic information from the environment and use it to create commercially valuable knowledge (Narula 2008). Multinational enterprises have allocated resources in research and this has unique roles in innovators, implementers and specialists where innovators have role of competently creating subsidiaries discovers and integrate new knowledge and these benefit most participants in the right technological clusters. R&D has contributed greatly in US by improving manufacturing, professional, scientific and information and accounts for 97% of research and development expenditure in the United States. This has increased has contributed to 2% of the total employment by foreign affiliates. R&D has contributed to geographical distribution and industrial distribution. R&D activities tends to be concentrated among large firms (Yorgason 2007). MNEs have often their own internal innovative network with units based in different countries R &D and technical centers shows research provides inputs to the local production units which are integrated into overall innovative strategy of the multinational enterprises. Theoretical and empirical research has investigated how companies have organized their internal innovative centers across countries, industries and companies. Certified multinational enterprises that intends to conduct research and business development shows how competent the business are developed , details of how number of employees and basis of employment , amount allocated for research and how the funds are raised. Management of innovation contributes in understanding the coordination mechanism of the process that multinational enterprises undertake and new tools and practices that are required to manage the innovation process. Research and development activities have been adopted by many economies and have encouraged revision of research policies (Mayer, 2000). Property rights Intellectual property is the property in intangible assets such as patent rights, designs, copyrights and trademarks. The patentable invention of new products or process which can be applied industrially needs not to be totally new product but a significant improvement on the existing products. Exclusive patent rights are given to the owner for a given period of time to exploit the products commercially. Property intellectual rights are divided into industrial rights which include rights for inventions, trademarks, designs and geographical indicators. Copyrights are rights of protection which covers literacy works. Intellectual rights allow creators and owners of patent rights benefit from their own investment on creation. Intellectual property characterized as property in ideas or expression for example a technological innovation protects rights of individual and businesses transformed ideas into property trade secrets like patent rely on private measures rather than state actions (Gupta & Rastogi, 2002). An intellectual property right is important to point out ownership of an idea, or ideal objects and effectively gives physical embodiment of the work or invention. One problem of creation based approach is that it protects only certain types of creation unless every single useful idea comes up with it’s subject to ownership but distinction between protectable and unprotectable inventions that we should claim everything is protectable by intellectual property rights (Kinsella 2001). Developing countries intellectual property rights provide enormous opportunities and challenges like the creation of ownership of knowledge products are of increasing importance because of the centrality of information and knowledge to post industrial economies. The legal protection has been in existence since 1700(Barton et al. 2002). Technology and globalization Globalization is multidimensional and can better be understood as economy whose core activities work as unit in real time scale. Multinationals corporations in manufacturing sector and finance networks with small and medium business and apply highest form of science and technology is concentrated in research and this leads to numerous innovations around the globe (Castells 1999). Technology is widely used in globalization and helps hold down the level of per capita income and this has helped to alleviate shortage and hence we have increased productivity and human capital is required to absorb and effectively use modern technology. Sustaining innovation is a major change in technology along the line that technology is changing with time for example traditionally trained technical experts for sustainable transformation ignores increasing evidence that is not just willing and opportunity that is required for change is essential because it sends strong signal on market demand .these are common when government and societal institution faced by challenges emanating from demand in areas of competitiveness , environment and employment (Mayer 2000). Government role in innovation Government is essential in innovation undertaken in its economy and this helps states in achieving industrial transformation by providing necessary legal infrastructure, providing education and skills required, investing in science and technology development for enhanced competitiveness, environment and job design and act as trustees of new technology (Ashford 2012). Conclusion Technological innovation and multinational enterprises are interrelated and contribute greatly to acquisition of the required technology and discovery of new ways on how we can use the available resources. Research and development is a key sector in every economy and we should have institutions that are made for research and more expenditure should be geared towards manufacturing, specialization and technical sectors in order to enable acquisition of competitive environment for foreign investors to invest and hence have the best knowledge applied with technology to increase efficiency. Research on innovation has developed deep insight into the nature and structure of technological clusters .international business recognizes the multinational enterprises as knowledge related opportunities and challenges embedded by multiple networks. References Archibugi, D & Iammarino, 2002. Globalization of technological innovation: Definition and Evidence. Review of International Political Economy 9:1 March 2002: 98–122. Ashford, NA 2012, Technology, globalization and sustainability. Barton, JH 2002. Intellectual property rights and development policy. Yalepress, Yale. Castells, M 1999, Information technology, globalization and social development, UNRISD. Discussion Paper No. 114, September 1999. Dash, B, Ebersberger, B & Loof, H 2007, The innovative performance of foreign owned enterprises in small open economies, Austrian Research Centers, Vienna, Austria Garcia, M & Huergo, E 2008, Technology transferred by multinationals. GRIPICO, Universidad Complutense. Retrieved form: www.etsg.org/ETSG2008/Papers/Garcia_Vega.pdf Gupta, G & Rastogi, A 2002, Intellectual Property Rights: Theory and Indian Practice, Centre for Civil Society, Hauz Khas Enclave, New Delh. Retrieved from: www.ccs.in/policy/rule/articles/IPR_India.PDF Kinsella, NS 2001. Property Rights, Tangible and Intangible, Journal of libertarian Studies, vol.15, No2, pp.1-53. Krahmer, JP & Reger 1999. New Perspectives on the Innovation Strategies of multinational Enterprises: Lessons for technology policy in Europe. Research Policy, Brandenburg, Germany Mayer, J 2000, Globalization, Technology Transfer and Skills accumulation in low income Countries, UNCTAD. Retrieved from: http://unctad.org/en/Docs/dp_150.en.pdf Mudambi, R and Tim S 2002, Industry & innovation multinational enterprises and the geographical clustering of innovation ram.vol 9, no 5, pp 23-76 Narula, R & Guimon, J 2008, Contribution of multinational enterprises to the upgrading of national innovation systems in the EU new member states: policy implications. Nobel, R & Birkinshaw, J 2000, Innovation in Multinational Corporation’s Strategic Management journal, Vol. 19, no 1 pp. 479–496. Yorgason, DR 2007, Research and development activities of US multinational companies. Preliminary results from the 2004 benchmark survey Retrieved from: http://www.bea.gov/scb/pdf/2007/03march/0307rdofmncs.pdf Zhao, Z & Zhang, KH 2006, Multinational Corporation and technology transfers in developing Countries: Evidence from china. Retrieved from: http://faculty.washington.edu/karyiu/confer/beijing06/papers/zhao- zhang.pdf Read More