The Upgrading of Multinational Regional Innovation Networks in China

Theories of globalization of innovation assume a hierarchical structure of location in the global division of innovation, with advanced innovative activities in the advanced economies and routine ones in the developing economies. This study attempts to explain why multinational corporations (MNCs) have localized a wide spectrum of innovative activities to China since 1995, which range from process innovation and product innovation to basic research. By comparing the dynamic transformation of two MNCs' regional innovation networks (RIN) in China – namely Motorola and Microsoft – this essay argues that the innovation upgrading process can be better understood through examining the interaction between the MNC subsidiary innovation centres and the local institutions.