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In today’s knowledge economy, clusters are a key driver of a country’s competitiveness. Yet a cluster’s technological base is now more than ever influenced by constituent firms’ actions to tap into distant knowledge sources. Drawing on a social network perspective, and distinguishing between horizontal versus vertical organization-based linkages, we explore the effects of a cluster’s connectedness to foreign locations on its innovation performance. We show that improvements in horizontal and vertical connectedness both stimulate a cluster’s innovation performance, but that their relative effects vary across cluster types. Innovation in knowledge-intensive clusters disproportionately benefits from enhancements in their constituent firms’ horizontal connectedness to foreign knowledge hotspots. Innovation in labor-intensive clusters mostly gains from stronger vertical connections by their firms to central value chain players abroad. We discuss the implications of our findings for research on global knowledge sourcing and cluster upgrading.

In 2013, China launched its ambitious Belt and Road Initiative (BRI), a large portfolio of infrastructure projects across 71 countries intended to link Eurasian markets by rail and sea. The state-led nature of the Initiative combined with its transformative geopolitical implications have conditioned the type of engagement that many governments and firms in host and third countries are willing to take in Chinese-funded BRI projects. Building on two theoretical streams that have originated in international political economy but have received growing attention in international business, varieties of capitalism and geopolitics, this perspective shows how a greater understanding of the institutional and geopolitical context surrounding BRI helps decipher the selection of host-country firms and third-country MNEs in Chinese-funded BRI projects. We portray firm selection in a BRI project as the outcome of a one-tier bargaining game between China and a host country. We show how institutions and geopolitics influence both the legitimacy gap of Chinese SOEs in a host country and the host country’s relative bargaining power, affecting the likelihood that host firms and third-country MNEs are selected in BRI projects. We also discuss the geopolitical jockeying strategies that these firms can adopt to influence the outcome of the bargaining game.

We use a new panel dataset to study the network of formal firm linkages within and across 52 aerospace clusters in North America and Europe. Our theoretical framework, built upon the knowledge-based cluster and global value chains literature, suggests that a reduction in spatial transaction costs has induced clusters to specialize in increasingly fine-grained value chain stages. This should cause the overall network to evolve from a geographically localized structure to a trans-local hierarchical structure that is stratified along value chain stages. Applying community structure detection techniques and organizing sub-networks by linkage type, we find empirical evidence in support of this proposition.

International business (IB) scholarship has developed a deep expertise in explaining how the international environment affects the behavior and strategies of firms, yet IB concepts continue to make limited inroads in policy circles. By comparing the fields of IB and international economics, I argue that a key reason behind this puzzle is that IB scholars have evolved into an epistemic community that builds on a frame of reference which is not adapted to policy practitioners’ concerns. IB researchers have a strong focus on the performance of the firm from a private perspective , whereas policymakers are interested in the performance of countries or regions from a public or societal perspective . I discuss the steps that IB scholars need to take to translate their findings so that they become compatible with the societal viewpoint and therefore more readily useful to policymakers.

Growing techno-geopolitical uncertainty affects international business in many ways, calling for more scholarly attention to its causes and multinational enterprise (MNE) responses. The United States CHIPS and Science Act epitomizes the country’s recent embrace of techno-nationalism in its economic rivalry with China, which has major implications for IB scholarship and management practice. The Act exhibits two features that fly against America’s traditional liberal policy stance of championing an open and rules-based multilateral system. First, its reliance on subsidies, export control, and investment screening signifies departure from free trade and from market-based industrial policies. Second, its use of guardrail provisions pursues the weaponization of global value chains for geopolitical and geo-economic purposes. We view the Act as a showcase of a paradigm shift from market-oriented liberalism to intervention-oriented techno-nationalism, heralding a new era of zero-sum thinking and geopolitical prioritization. By examining the broader trend of techno-nationalism, we explore the distinct features of the Act and analyze the geo-strategies that MNEs need to adopt in response to the resulting techno-geopolitical uncertainty. Our analysis highlights the paradigm shift in policymaking, identifies the root causes of this shift, and examines the potential pitfalls it may create. To navigate this uncertain landscape, we suggest four strategic responses for MNEs: geo-strategies, reconfiguration, resilience, and corporate diplomacy.

We introduce a special collection of papers on COVID-19 and international business policy that looks at the global policy challenge from different perspectives. The combination of confinement and protectionist measures including export bans, import tariffs and border closures that were introduced in response to the COVID-19 pandemic affect MNEs by increasing trade costs and amplifying the costs of communicating tacit knowledge. In this editorial, we draw specific attention to how these policies impact the heart of MNEs’ activities – the knowledge-intensive intangibles. Physical distancing limits the face-to-face meetings that undergird the production of intangibles in large urban hotspots. At the same time, travel restrictions constrain MNEs’ abilities to connect to and source knowledge from their foreign partners. Virtual conferencing has helped MNEs to cope with these challenges but it remains an imperfect substitute. A protracted public health crisis that would require limiting social interactions in the medium term might push MNEs to reconfigure their knowledge management strategies both locally and globally.

Do different types of innovation require distinct kinds of external knowledge search strategies? This paper explores this question using an original innovation survey of 385 KIBS firms in Ontario (Canada). Applying ordered regression analysis, we show that KIBS which conduct marketing innovation have higher degrees of external knowledge sourcing than those that engage in other types of innovation. KIBS that conduct product innovation have higher degrees of external partnering than those that focus more intensively on other types of innovation.

We use community detection analysis to investigate the structure of Bengaluru's ICT cluster's inter-organizational network during the period 2015–2017. Building on the knowledge sourcing literature, we conjecture that cluster firms primarily build knowledge-seeking horizontal linkages with technologically similar companies, and that this splits the network into multiple technological communities within which firms are tightly connected, but between which linkages are scarce. We further propose that community-spanning firms which build horizontal linkages that bridge technological communities are more likely to conduct radical innovation than their peers. We finally argue that no relation exists between technological proximity and community formation in the network of vertical buyer-supplier relations. Using a voltage-based algorithm for community discovery, we draw empirical support for these predictions. We discuss the implications of our findings for Bengaluru's upgrading potential. 我们利用社区检测分析，对2015-2017年间班加罗尔ICT集群组织间网络进行了研究。基于知识源化相关文献，我们推测，集群企业主要与技术相似的企业建立寻求知识的横向联系，这就将整个集群组织间网络分割为多个技术社区，企业通常与其所在技术社区内的企业联系紧密，但缺乏与社区间企业的联系。我们进一步提出，与同类企业相比，跨社区建立横向联系的企业更有可能进行突破性创新。最后，我们认为在垂直的买方——供应商关系网络中，技术邻近性与社区形成之间没有关系。基于电压的社区发现算法结果表明，我们的预测得到了支持。同时，我们进一步讨论了本研究结果对班加罗尔升级潜力的启示。 С помощью анализа сообщества, мы исследуем структуру межорганизационной сети в ИКТ кластере в Бангалоре за период 2015–2017 гг. На основании литературы по источникам знаний, мы предполагаем, что кластерные компании прежде всего налаживают горизонтальные связи для получения знаний с компаниями в сходной технологической сфере, и что это разделяет сеть на несколько технологических сообществ, внутри которых компании тесно связаны, но связи между отдельными сообществами отсутствуют. Мы также предполагаем, что компании, которые связывают свои сообщества, а также развивают горизонтальные связи между разными технологическими сообществами, с большей вероятностью будут осуществлять радикальные инновации, чем другие компании. Наконец, мы утверждаем, что не существует никакой связи между технологической схожестью и формированием сообщества в сети вертикальных отношений между покупателем и поставщиком. Используя алгоритм, основанный на разности потенциалов, для исследования сообщества, мы получаем эмпирические подтверждения для этих предположений. Мы обсуждаем практическое значение наших выводов для повышения потенциала Бангалора. Usamos análisis de detección comunitaria para investigar la estructura de la red inter-organizacional del clúster TIC en Bengaluru en el periodo 2015-2017. Con base en la literatura de abastecimiento de conocimiento, conjeturamos que las empresas del clúster construyen principalmente vínculos horizontales para la búsqueda de conocimiento con empresas tecnológicamente similares, y que esto divide la red en múltiples comunidades tecnológicas dentro de las cuales las empresas están estrechamente conectadas, pero entre las cuales los vínculos son escasos. Adicionalmente proponemos que las que abarca la comunidad las cuales construyen vínculos horizontales que tienden puentes en las comunidades tecnológicas son más propensas a realizar innovaciones radicales que sus pares. Finalmente discutimos que no existe relación entre la proximidad tecnológica y la formación de comunidad en las redes verticales de comprador-proveedor. Usando un algoritmo basado en voltaje para el descubrimiento comunitarios, obtenemos apoyo empírico para estas predicciones. Discutimos las implicaciones de nuestros hallazgos para el potencial de mejoramiento de Bengaluru.

 Supply chain disruptions did not cause the shortages of personal protective equipment (PPE) and other essential goods that the world experienced in the early months of the COVID-19 pandemic. Rather, the cause was manufacturers’ inability to step up production of PPEs to meet the demands of the crisis. The accepted wisdom that the pandemic exposed serious structural problems in international supply chains, such as an over-dependence on China, and that it would be better for countries to source supplies domestically, is inaccurate.  The companies that produced PPEs and other essential goods were experienced when it came to developing risk-management strategies. Manufacturers have understood the risks related to international supply chain shocks at least since 2008’s global recession and have long since responded by diversifying supplier bases, increasing manufacturing capacity and creating stockpiles. Many firms also relied on the China Plus One strategy as a buffer, which entailed duplicating production in China and at least one other country to protect against supply chain disruption and currency fluctuation.  Far from exposing a weakness in global value chains, the pandemic instead revealed their resilience. So well did the face-mask industry rebound from its initial shortage in fact, that industry revenues grew by 450 per cent from 2019 to 2021. Rather, the shortages arose because of limited stockpiles, governments’ lack of preparedness and constrained production, such as the difficulty in accelerating the melt-blowing process that creates the masks’ non-woven fabric. Exacerbating the situation – but only temporarily – were export bans of the type the Trump administration imposed on manufacturers, which required them to obtain federal approval before exporting PPE.  COVID-19 will not be the last pandemic the world experiences. Governments can prepare for the next one by establishing stress tests that assess a country’s ability to deal with demand spikes and other disruptions. The tests should consider the government’s level of stockpiling, the speed with which domestic and foreign production can be ramped up, the diversification of import sources and the limitations created by foreign export restrictions. If the market fails to pass these stress tests, then government must design policy tools to deal with the shortcomings the tests reveal. Limiting export restrictions to strengthen resilience, conducting joint procurement and drafting agreements to share essential goods are ways countries can work together to promote resilience.  Self-sufficiency, which looked to be the solution in the early days of pandemic shortages, only increases vulnerability to local disasters that can curtail domestic production. It also creates higher production costs and reduces the ability to ramp up production. Self-sufficiency forces countries to absorb the shocks themselves, resulting in large price swings and production changes.  It is now up to governments to learn the hard lessons that COVID-19 taught and improve preparedness for future pandemics.  

Purpose In the context of China’s efforts to build world-class enterprises through mixed-ownership reform, this study aims to build an agency theory framework to analyze the differential relation between ownership structure and firm performance in majority versus minority state-owned enterprises (SOEs). It also evaluates the differential influence that political connectedness has on firm performance in the two types of SOEs. Design/methodology/approach Using a panel data set of Chinese state-controlled mixed-ownership enterprises covering the period 2010–2019, this paper uses ordinary least squares, random-effects, fixed-effects and three stage least squares regression analysis to study the differential impact of ownership structure and political connectedness on firm performance in majority versus minority SOEs. Findings In minority SOEs, firm performance is positively related to the ownership share of the largest private shareholder and state ownership positively moderates this relation. Furthermore, minority SOEs with a politically connected chairman perform worse than those with a politically connected chairman. In majority SOEs, there is no relation between the ownership share of the largest private shareholder and firm performance. In addition, majority SOEs with a politically connected chairman perform similar to those without a politically connected chairman. Originality/value The theoretical framework demonstrates that agency problems are substantially different in minority versus majority SOEs and that this influences how changes in ownership structure and in the type of chairman that is assigned affect firm performance. The empirical analysis confirms these predictions.