Beyond Catching Up: How Recombination and Institutional Co-Evolution Are Reshaping Innovation in Emerging Economies
Drawing on a seminal 2021 editorial in the Journal of International Business Studies, this article explores how innovation in emerging economies is driven by the dual challenges of sustained catching-up and the co-evolution of firms, institutions, and networks. It argues that innovation is not merely technological but encompasses organizational and transactional improvements through the recombination of local and imported knowledge. Multinational enterprises (MNEs) act as key instigators, conduits, and beneficiaries of this process, redefining firm-specific advantages (FSAs) for both local and foreign firms. The article offers deep insights for international business researchers and policymakers on the need for appropriate institutions to support R&D, training, standards, and knowledge coordination, and highlights emerging patterns in global innovation dynamics.