Innovation in Global Value Chains: Co-location of Production and Development in Italian Low-Tech Industries

Buciuni G. and Finotto V. Innovation in global value chains: co-location of production and development in Italian low-tech industries, Regional Studies. Despite the spread of global value chains, recent studies suggest that disentangling tangible and intangible activities hinders innovation. Acknowledging the importance of the co-location of research and development (R&D) and manufacturing, this paper investigates the co-location rationale in three Italian industries. Drawing on a multiple case study, findings reveal that while innovation thrives on internationally dispersed functions, the execution of a specific bundle of development activities hinges on distinctive manufacturing knowledge. Evidence suggests that this innovation bundle is performed where industrial production occurs. Accordingly, this paper claims that it is the contiguity between development activities and production in manufacturing locales that ultimately supports innovation.