Where do capabilities reside? Analysis of related technological diversification in multi-locational firms

Where do businesses source the capabilities that influence their diversification? From the resource-based perspective, capabilities are located within the firm. For many economic geographers, capabilities are place-based and flow between firms in local areas. Others claim the capabilities that count emerge from non-local collaboration. The value added of this paper is a firm-establishment-patent dataset that helps identify the sources of capabilities regulating technological diversification in the establishments of multi-locational firms. Results show that capabilities located within establishments themselves are most important to the process of diversification, followed by firm capabilities and then place-based capabilities.