We investigate the spatial pattern of patenting by the world’s largest multinational enterprises (MNEs). Based on a summary of the theoretical literature on R&D by MNEs and the spatial nature of knowledge generation and knowledge spillovers, we expect spatial concentration of patenting by these large MNEs. A database is developed that provides information on patenting by European region (we use 125 regions) at the aggregated MNE group level. This database is used to describe a number of features of the spatial pattern of pateting by MNEs in Europe. The main findings in this respect are that MNEs patenting activities are strongly concentrated in a relatively small number of regions and that the share of foreign patenting in total patenting varies greatly by firm. In an attempt to shed light on the mechanisms behind these tendencies, we use patent citations to measure the spatial concentration of knowledge flows and spillovers between firms, and within the same firm between different regional locations. For the majority of cases, we find that units between which patent citations occur are located relatively near to each other, which indeed points to the spatial character of patent citations. This holds for between-firms citations and within-firms citations. Moreover, we find a distinct time pattern associated to knowledge flows (as indicated by patent citations): the spatial scope of these flows first broadens but then narrows down again.
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