Interaction between Host Countries’ Innovation Systems and Investment Strategies of Transnational Corporations: A Case Study of a US-based Conglomerate

Though the roles of transnational corporations (TNCs) in host countries have been extensively studied, there is not enough empirical research on the interactions between corporate strategies of transnational corporations and innovation systems of host countries. This research is based on a single case study of a US-based Conglomerate investing in several countries around the globe. We paid particular attention to their investments in Singapore and Thailand and investigated how strategies of this TNC interact with national innovation systems of these two countries. The findings illustrate that Singapore’s National Innovation System is much stronger and more pro-active in inducing new investment from the TNC. Over time, it incentivised and pressured the company to move up the global value chain by investing in activities requiring higher technological and innovative capabilities. There is a strong relationship between Singapore’s national innovation system and investment by the TNC. This is not the case for Thailand.