Abstract

Information Technology (IT) multinational enterprises (MNEs) have garnered a significant amount of attention in relation to the growth of indigenous IT sectors (Brannigan and McManus, 2014; Siedschlag, Zhang and Smith, 2013; van Oort and Atzema, 2004). Compared to some sectors, the IT industry - which trades in immaterial goods - may be less dependent on spatial constraints since it does not rely on large scale labor force or massive movement of raw materials. This alleged ‘death of distance’ promises great changes in international business and poses questions about how indigenous economies and spatial policy are being affected (Maeng and Nedovic-Budic 2008 and 2010). Even though in principle international business is open to organizations of any size, in practice it tends to be dominated by MNEs. MNEs can sustain the cost and capacity of operating across countries and to address the volatility of functioning across diverse jurisdictions. Still, MNEs do not exist in a solely stateless space. They need to ‘touch the ground’ in specific places to hire people and get work done, to set headquarters and formalize legal bounds. They also play an important role in the formation of industrial clusters and networks (Nadvi, 1995) From the perspective of local host economies, attracting an MNE is perceived as a means of stimulating the growth of indigenous companies through knowledge spillovers (Motohashi and Yuan, 2010; Breznitz, 2010). Often, a question for governments is if the presence of MNEs within their territory benefits the indigenous economy and if there is a satisfactory number of new firms emerging from the purported knowledge and capital spill-overs. This is especially the case for IT as there are lower barriers to accessing means of production for entry into the market (Benkler: 2006), resulting in a higher potential for small businesses to start and grow. The objective of policy makers in attracting MNEs is not only job creation via MNEs, but job and wealth creation via the emergence of new indigenous IT companies and the strengthening of existing indigenous companies, through transfer of knowledge and other forms of capital from MNEs. The policy process is also focused on encouraging regional innovation systems which comprise of both international and indigenous companies, and ultimately helps build a national innovation system (Chung, 2002). Against this broad background, the presented research focuses on networks of inter-organizational relations (rather than the classic dichotomy hierarchy vs. market), which are approached through a spatial analysis of clusters. More precisely, it focuses on the spatial dimension of their interactions and the nature of their communications. While we recognize the complexity of these phenomena, with this research we aim at a concrete contribution to the debate on clustering and proximity as locational factors (among others: Mole et al.: 2011).

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