THE ROLE OF SPILLOVERS AND EXTERNALITIES IN THE LOCATION OF MNCs’ FOREIGN INNOVATIVE ACTIVITIES. EVIDENCE AT THE EUROPEAN REGIONAL LEVEL

This paper examines the siting of foreign-owned corporate technological development in European regions. The data used are patents granted in the US to the world's largest firms in the period 1987‘95, identifying the ultimate nationality of ownership and the location of the research facility responsible for each patent. According with the literature on knowledge creation in MNCs and the broader innovation literature, we find that location of foreign-owned research tends to agglomerate, depending positively upon: (i) the potential for intraand inter-industry spillovers; (ii) the local scientific and educational infrastructure, and (iii) the technological specialisation of regions as well as the local market size. However, some differences do exist when considering different European countries.