The Regional Embeddedness of Multinational Companies: A Critical Perspective

Multinational companies (MNC) face a constant tension between a regional orientation which entails regional embeddedness and their world-spanning activities. The relationship between MNCs and their regional surroundings is here analysed at two levels, the institutional level of the ‘fit’ between the regional environment and the MNC's activities, and the project-specific level in which direct, innovation-related interaction between the company and regional players takes place. It can be shown that these two levels may show very different characteristics with regard to one and the same company, and that selective and dynamic forms of regional embeddedness occur. Furthermore, regional embeddedness of innovation projects does not necessarily take place even if the region offers ample possibilities for cooperation and regional links of the MNC at the institutional level may be strong. A thorough understanding of an MNC's relationship to its region is hence dependent upon a process-oriented two-level analysis.