Multinationals and intra-regional innovation concentration

Abstract

This article examines the extent to which the presence of multinational enterprises (MNEs) influences the concentration of innovation among patenting firms within US states from 1976 to 2010. Merging patent and regional socioeconomic data, this study explores the effects within 50 US states over more than three decades using Ordinary-Least-Square and Instrumental Variable estimations. It shows that MNEs significantly contribute to the concentration of patenting activity, an effect predominantly driven by domestic-owned MNEs. The impact differs across space: states with a higher share of MNEs experience a sharper increase in patenting concentration. Crucially, it is the non-MNE firms that feel the squeeze the most, with those in the middle of the patenting hierarchy producing fewer patents when domestic MNEs ramp up their activity. This suggests that economic globalisation, while enhancing innovation opportunities for some, reinforces competitive pressures and barriers for others. These findings offer a new perspective on the forces shaping regional innovation dynamics, highlighting the role of MNEs in both amplifying innovation gains and exacerbating disparities in knowledge production.