TECHNOLOGICAL AND LOCATION STRATEGIES OF THE LARGEST FOREIGN MNCs IN THE EUROPEAN REGIONS

This paper investigates the location of foreign-owned MNC technological activities in the European regions over the period 1987-1995. Specifically, it focuses on the different strategies driving MNCs’ locational choice (to exploit or augment competencies developed in their home base), the influence of the potential for intraand inter-industry spillovers, and externalities stemming from the local scientific and educational base. The empirical investigation uses patents granted in the US to the world’s largest industrial firms for inventions achieved in their European-located operations, classified by the host European region in which the research facility responsible is located. The model developed explains spatial patterns of activity by foreign-owned firms and shows that inter-industry spillovers positively affect all types of activity, science-technology spillovers affect only those classified as 'home base augmenting', while intra-industry spillovers depend on whether they originate from domestically-owned or other foreign-owned firms.