Extraregional linkages and the territorial embeddedness of multi-national branch plants: evidence from the South Tyrol region in North-East Italy.

The paper re-evaluates the regional embeddedness of multinational manufacturing branch plants in view of recent work on global production networks and extra-regional links. It is argued that the predominance of extra-regional production linkages are not necessarily detrimental to regional economies. They can even compensate for weak territorial innovations systems in non-core regions. The arguments are exemplified through a case study of the South Tyrol region in North-East Italy, using firm level survey and interview data, complemented by evidence on institutional conditions. The findings suggest that neither the branch plants nor the locally owned manufacturing firms are strongly embedded in the region in terms of material linkages and inter-organizational relationships, indicating that ownership status of firms is not a good predictor for embeddedness. Second, compared to local firms, branch plants are more innovative, hence contributing to a larger degree to regional upgrading processes. Third, South Tyrol’s core institutional structures such as those governing the labor force play a decisive role in branch plant competitiveness and therefore create co-dependencies that bind these producers to the territory. The results suggest a more differentiated assessment of the role of branch plants within non-core regions.