Regions and cities face unceasing pressures to adapt in response to processes of globalization, changes in industrial production, and new patterns of migration and trade. At the same time, the dominant development policies are proving less than capable of providing answers to these challenges. Strategies based on a mix of physical and human capital and technology have not succeeded in dealing with growing territorial inequality and its treacherous economic, social and political consequences. There is thus an urgent need to understand why territorial divergence occurs and why there is what seems to be a growing decline in the returns of public intervention targeting economic development. In the search for answers, scholars have turned to the examination of institutions. But despite progress in our grasp of how institutions affect development, crucial knowledge gaps remain. This paper reviews recent progress in our understanding of the role of institutions for development, unveils the most important gaps, and proposes a series of avenues to improve how a better understanding of how institutions shape regional and urban development can lead to more efficient development policies.

Institutions and the fortunes of territories

The aim of this article is to examine how externally recruited, highly skilled (re-)migrants facilitate cross-border knowledge transfers in multinational enterprises (MNEs). To achieve this goal, an actor-centred research perspective will be adopted, which allows for a detailed examination of both individual employees involved in MNEs cross-border knowledge transfers as well as organizational strategies to facilitate and structure knowledge transfers. Empirically, the article is based on the example of highly skilled (re-)migrants of Turkish origin, who obtained a university degree in Germany, then (re-)migrated to Turkey and work in subsidiaries of German MNEs. The empirical results show that highly skilled (re-)migrants of Turkish origin are strategically used to work at interface positions between German and Turkish business units. Based on their professional expertise, dual societal embeddedness and profound language skills, highly skilled (re-)migrants facilitate cross-border knowledge transfers by building social proximity and bridging institutional distances. Overall, the article contributes to the micro-foundation of cross-border knowledge transfers in MNEs. 

https://onlinelibrary.wiley.com/doi/pdfdirect/10.1111/glob.12362

Highly skilled (re‐)migrants in multinational enterprises: Facilitators of cross‐border knowledge transfers

Abstract The Uppsala Internationalization Process Model falls short in its ability to explain how emerging market firms internationalize. In this respect, the model needs to be enhanced through theoretical and empirical contributions. In this study, we aimed to increase the relationality of the model by employing the ethnic networks approach. As a case study for emerging market companies, we focused on the internationalization processes of Turkish food companies, which have been relatively little studied until now. Based on data from qualitative interviews, we found that ethnic networks in Germany play an important role in the initial stages of export activities, in location selection, in gaining market information, and in reaching the mainstream retailers and consumers for Turkish food companies. Adopting the ethnic networks approach enables us to see the roles of previously ignored relationships. Our findings show that, in future research, the role of ethnic networks should not be overlooked in the process of applying the Uppsala Internationalization Process Model on emerging market firms.

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Ethnic networks in the internationalization of Turkish food producers

Abstract We study the role of local industrial embeddedness (the share of regional interindustry economic activity that is anchored to a region) on regional resistance (the difference between pre- and postcrisis employment) to the 2008 Great Recession (GR) in EU and UK NUTS-2 regions. The recession had profound effects in regional economies, which showed diverse performance based on their capacity to absorb the shock. The concept of economic resilience has been brought to the center of attention with several contributions exploring its determinants. However, the impact of the embeddedness of local economic systems in terms of sales and supplies has been largely unexplored. We use regional input–output tables to approximate the embeddedness of local economies, and we use fixed-effects and quantile regressions to test its relationship to regional resistance between 2008 and 2011. We find that during the GR, regional industries opted to change input rather than output markets. Additionally, embeddedness has a curvilinear relationship to regional resistance that varies across the distribution of regional resistance performance. Finally, at the industry level, we find regional embeddedness to be important to the resistance of manufacturing and financial and business services, and sectoral embeddedness to matter more for the resistance of construction and wholesale, retail, and information technology. Our findings highlight nuances that policy makers should be aware of in planning for resilience.

https://doi.org/10.1080/00130095.2023.2174514

Industrial Embeddedness and Regional Economic Resistance in Europe

Until the so-called GPN 2.0 approach placed it on the research agenda, risk had played a subordinate role in the literature on global production networks (GPN). In GPN 2.0, Knight's economic notion of risk is applied and defined as rationally calculable, in contrast to uncertainties. However, this still dominant conceptualization of risk falls short of an actor-centered focus, which is a focal point of the GPN 2.0 approach. Therefore, we advocate for a stronger conceptual integration of a social constructivist premise with a spatio-relational understanding of risk to enhance the explanatory power of GPN risk. This article highlights that GPN risk needs to be framed as becoming causally significant in the perception and expectations of organizational decision-makers. We argue that the organization-environment interaction causes the production and constitution of risk. In pursuit of an integrative research design, we develop a multi-scalar framework based on a performative risk narrative perspective.

https://journals.sagepub.com/doi/pdf/10.1177/0308518X231169288

Revisiting risk in the Global Production Network approach 2.0 - Towards a performative risk narrative perspective

The reaction of foreign firms to institutional changes: The case of German direct investment in Turkey

Recent studies claim that the extra-firm environment as a causal driver for configuration processes in global production networks is understudied. The case of Turkish cross-border foreign direct investment into Germany is analysed to facilitate a better understanding of how transnationally embedded firms perceive and respond to extra-firm risk environments. The global production network lens frames the discussion, applying the analytical categories of embeddedness, risk and value. Qualitative interviews with 15 Turkish firm managers in Germany and 24 experts in the field of Turkish-German business relations were conducted. The analysis shows that transnationally embedded Turkish firms respond to extra-firm risks by deepening their territorial embeddedness in the host country. While mimicking domestic firms on the level of societal embeddedness, Turkish firms dissociate from risk narratives related to their home country and valorise their association with the German embeddedness context on the firm and network level. 

https://onlinelibrary.wiley.com/doi/pdfdirect/10.1111/tesg.12557

Philip Völlers

Papers

The reaction of foreign firms to institutional changes: The case of German direct investment in Turkey

Revisiting risk in the Global Production Network approach 2.0 - Towards a performative risk narrative perspective

Mitigating Extra‐Firm Risk Environments – The Case of Turkish Firms in Germany