MNE–SME co-innovation in peripheral regions

Abstract

While there is growing interest in the division of entrepreneurial labor between MNEs and SMEs, most prior work focuses on empirical settings based within reputed clusters. To gain a more complete understanding of this phenomenon, we explore policy-induced efforts to facilitate MNE–SME collaboration for innovation in peripheral subnational regions (ones outside reputed clusters) in China and the UK. Our inductive study suggests that non-market actors’ intervention in the form of entrepreneurial boundary work entails three sub-processes: sensing, interfacing and co-creating. We find that boundary work manifests differently in advanced and emerging economies: as bottom–up opportunity discovery in the UK and top–down opportunity creation in China, with the former involving a bespoke policy measure and the latter a “bricolage” approach of making do with an existing generic policy that was creatively utilized. We thus shed useful light on how boundary work could connect previously unconnected innovation partners in different institutional contexts, and highlight the importance of integrative and innovative regional policies for promoting mutually beneficial MNE–SME collaboration.