Globalization & technology: interdependence, innovation systems and industrial policy

Technology and globalization are interdependent processes. Globalization has a fundamental influence on the creation and diffusion of technology, which, in turn, affects the interdependence of firms and locations. This volume examines the international aspect of this interdependence at two levels. First, between locations, by examining the role of cross-border interdependence in the innovation process. Second, between firms, by studying the dynamics of inter-firm R&D collaboration. The central arguments build around the concept of "inertia", the process of evolutionary change, and a "systems of innovation" understanding of learning. Narula and Smith reconcile an important paradox. On the one hand, locations and firms are increasingly interdependent through supranational organisations, regional integration, strategic alliances, and the flow of investments, technologies, ideas and people. The boundaries of firms and countries are increasingly porous and imprecise, because firms use alliances and outsourcing, and countries are rarely technologically self-sufficient. On the other hand, locations remain distinct and idiosyncratic, with innovation systems remaining largely nationally bound. Knowledge creation suffers from "inertia" and remains concentrated in a few locations, because of the systemic nature of learning. By drawing on a wide variety of data at the firm and national level in the sphere of R&D and technological innovation, this book spells out important lessons for both policy makers and managers on industrial policy as well as the organisation of research and development by firms.