Enhancing the Absorptive Capacity of Regions to Benefit from the Innovation Potential of Multi-National Corporations

Abstract

Our interest in writing this article is to create a bridge between the scholarly and academic research on technological innovation and a private sector, for-profit business model that implements the ideas on innovation and entrepreneurship, primarily in metro regional economies.

We begin by noting that John Edwards had it slightly wrong. There are not two Americas, there are two economies, a global economy, comprised of large global corporations, and the domestic economy, that is not linked to the global economy, but that mostly operates in distinct metro regions.

We review the scholarly literature concerning a region's "absorptive" capacity for innovation. We make an analogy to how large corporations enhance their internal absorptive capacity, and apply that model to regions, as if regions had the capacity to function like a corporation.

We explain that the economic brains of a metro region would establish a knowledge feedback loop from the existing regional value chains (realized) AC potential, and entrepreneurial new venture creation and small manufacturing innovation (potential AC). As if regions actually had brains.

We conclude that the old populist rubric of two Americas, deployed by Edwards, would have to be updated and modernized in order to express the idea of two economies, a global one and a domestic one. Workers in the U. S. domestic economy do not need more government welfare, and rich folks in the global economy do not need to pay higher taxes.

The solution to the erosion of America's technological innovation capacity is to link the economic revival of metro regional economies to the technological innovation capacity of multi-national corporations. This idea would have meant changing the Edwards' campaign theme song from "Happy Days Are Here Again," to the song sung by the straw man in Wizard of Oz: "If I Only Had A Brain."

Keywords: : multinational corporation, small manufacturing enterprise, history, entrepreneur, industrial value chains, innovation, economic development, technology investments, absorptive capacity

JEL Classification: L16, M13, O31, O32, O33, O38, R15, R58