Multinational strategies, local human capital, and global innovation networks in the automotive industry: case studies from Germany and South Africa

Abstract

This paper focuses on the relationship between strategies of Northern and Southern firms, mostly multinational enterprises (MNEs), and human capital in Southern host countries in the automotive supply industry and the implications of this relationship both for the management of technological change and for the constitution of global innovation networks (GINs). Using a case-study approach drawing on firm-level interviews in both the home country (Germany) and the host country (South Africa), we find that the offshoring of knowledge-intensive activities is beginning to appear in an industry that is known more than others for centralizing most such activity close to headquarter locations and always in developed economies. It is also evident that the extension of GINs is not just based on Northern MNEs taking advantage of advanced capabilities in developing countries. Firms from the South, too, inshore the relevant knowledge through the acquisition of strategic assets in the North.