Critically evaluate the key concepts and processes of innovation Essay

Critically evaluate the key concepts and processes of innovation - Essay Example Multinational enterprises organizes themselves into clusters in order to exploit benefits within the clusters for example they have explained that international corporation spread knowledge in different economies rather than inter firm networks .Multinational enterprises are crucial actors In innovation globally and contributes greatly on knowledge based economy .technology transfer of knowledge from multinational to foreign subsidiaries is more labor productive than in local companies hence the productivity advantage of multinationals .Research and development has been internalized by decision makers in government and this has increased innovations with multinational cooperation’s have built up their sales distribution and operations base in foreign countries.(Kinchella,2001). Innovation Innovation has being defined as the ability of affirm to devote resources into innovating new areas which have not being explored and exploiting. For example he tried to explain how socializi ng of managers has contributed to increased integration ( Mudambi & Swift, 2012) the only Way to achieve this is by through research and Foreign direct investment is geared towards exploiting existing ownership development(R&D) actitivities to trap unutilized resources globally. Innovation can only be achieved through foreign direct investment by multinationals corporations which transfer technology and hence end up benefiting the local industries mainly from spillovers and capturing absorptive capability of potential benefits from FDI (Zhao & Zhang 2006). Environment affects innovations and adaptation of new technology and improve overtime in order to enhance technological capabilities and competitive advantage such decisions are influenced by the incentives , markets skills , capital and suppliers as well as institutions which firm interacts with . Hence innovation is an interactive process which links agent’s responds to the market and this determines the rate of generatio n adaptation acquisition and dissemination of technology in productive activities. Innovation has played an important role in shaping policies and how interactions and linkages between actors bring about market failures the interactions between firms and non firm sectors i.e. universities and research and development. Innovation seeks to improve and find new ways of doing things. For example, in the European union states such as Czech Republic and Hungary used protectionist policy to encourage multinational enterprises (Narula & Guimon, 2008). Foreign direct investment (FDI) is one of the most used methods to show how innovation has helped provide positive externalities into the local economies multinational companies transfer technology to the foreign subsidiaries that can be appropriated by local firms (Garcia& Huergo 2008). Technology transfer Technological clusters enable flow of local knowledge and innovations. This knowledge is tactical and involves new concepts and ideas like in research and development where innovation requires high knowledge in its creation. This enables transmitting knowledge from one person to another and increases labor productivity and specialization (Castelles, 1999). Technology is defined as a scientific knowledge of methods used to advance in how we do our daily activities in expanding growth in the host. Research and development is the only way to explore new ways of producing goods and services. To