Multinationals, Techno-Entrepreneurs, and the Globalization of Technology Value Chains

Abstract

An important element of technology globalization is the rise of technology-based entrepreneurs in China, India, Mexico and other emerging economies. Increasingly, these techno-entrepreneurs are strategically important as part of the innovation value chain of multinational enterprises (MNEs). Some of these linkages began as MNEs sought to cut costs by outsourcing activities to offshore firms. More recently, however, MNEs are globally dispersing more and more of their engineering work, and increasingly the MNEs are having emerging economy techno-entrepreneurs do much of their higher-level engineering and technology development work.This has major potential consequences for the MNEs, their home countries, their host countries, and the on-going development of global technology value chains. Before assessing these potential consequences, however, we need a much clearer understanding of how these local entrepreneurial firms fit into the strategies of the MNEs and of the processes by which the entrepreneurial firms come into being and develop as key parts of global technology creation chains. We need to understand better the role the new entrepreneurial firms are playing in the development of technologies that the MNEs use to serve customers not just in the emerging economies, but around the world.The specific organizational form of Techno-entrepreneurship, the inter-firm linkages, the growth trajectories as well as the implications for national policies have been under conceptualized in the existing literature. Technology entrepreneurship that is linked to MNEs is, we hypothesize, different from the general category of entrepreneurship. Further, we consider the extent to which linkages with offshore techno-entrepreneurs are complements to, and the extent to which they are substitutes for, MNE linkages with techno-entrepreneurs in their home country. The implications for MNEs and national competitiveness are also examined.Based on field work carried out in the U.S., EU, Japan, China, India, and Mexico by the authors and their collaborators from these countries, this paper presents brief case descriptions of the processes by which technology entrepreneurs from the emerging economies are becoming part of worldwide technology value chains.