Location and Collocation Advantages in International Innovation

Rajneesh Narula, Grazia D. Santangelo

Research output: Contribution to journalJournal articleResearchpeer-review


Purpose: This paper examines the role of location‐specific (L) advantages in the spatial distribution of multinational enterprise (MNE) R&D activity. The meaning of L advantages is revisited. In addition to L advantages that are industry‐specific, the paper emphasises that there is an important category of L advantages, referred to as collocation advantages.Design/methodology/approach: Using the OLI framework, this paper highlights that the innovation activities of MNEs are about interaction of these variables, and the essential process of internalising L advantages to enhance and create firm‐specific advantages.Findings: Collocation advantages derive from spatial proximity to specific unaffiliated firms, which may be suppliers, competitors, or customers. It is also argued that L advantages are not always public goods, because they may not be available to all firms at a similar or marginal cost. These costs are associated with access and internalisation of L advantages, and – especially in the case of R&D – are attendant with the complexities of embeddedness.Originality/value: The centralisation/decentralisation, spatial separation/collocation debates in R&D location have been mistakenly viewed as a paradox facing firms, instead of as a trade‐off that firms must make.
Original languageEnglish
JournalMultinational Business Review
Issue number1
Pages (from-to)6-25
Number of pages20
Publication statusPublished - 2012
Externally publishedYes


  • Foreign direct investment
  • Multinational enterprises
  • Eclectic paradigm
  • Collocation
  • Country-specific advantages
  • Innovation
  • International business

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