Adaptation, bridging and firm upgrading: How non-market institutions and MNCs facilitate knowledge recombination in emerging markets

This seminar will present results from a larger project about the ways in which emerging market countries can build new types of institutions to help their firms innovate and compete in international value chains.  Using a network methodology, this project has analyzed the impact of different types of organizations and institutions on the flows of knowledge and on the capabilities of firms in the Argentine wine and autoparts industries.  Today, we analyze how multinational corporation (MNC) subsidiaries and local institutions help

or hinder emerging market suppliers to upgrade their capabilities. Drawing on insights from economic sociology and comparative capitalism, we posit that in these contexts of scarce resources and inferior technologies upgrading depends on the ways in which organizational and institutional networks enable firms to integrate imported advanced knowledge with local applied knowledge. Using a combination of field work and unique survey data of Argentine auto parts suppliers, we show that process upgrading improves significantly when suppliers have ties to seemingly resource-weak non-market institutions that improve access to a variety of experiential knowledge. These institutions act as knowledge bridges, helping local firms tap into diverse applied knowledge embedded in isolated industrial districts and adapt frontier advanced practices to their local conditions. Moreover, suppliers appear to benefit from ties to MNC subsidiaries only when they simultaneously collaborate with certain non-market institutions that help them recombine experiential knowledge with the standards gained from the subsidiaries.