The starting point for this paper is a fundamental change currently occurring in the way innovation is organised in developed countries: it tended to be centralised at or near headquarters, but is now much more decentralised within the company. Equally if not more significant, innovation activities that used to be carried out in-house by innovating firms themselves are carried out by independent suppliers of knowledge intensive business services or are transferred to key suppliers.
The question driving this paper is how this ‘organisational decomposition of the innovation process’ changes the global distribution of innovation of activities. Does it contribute to their global dispersal to the developing world or does it strengthen the existing concentration? Since this is uncharted territory, the paper seeks guidance from theory and draws out the insights which can be gained from the innovation systems and Global Value Chain (GVC) perspectives. This then leads to the identification of the new questions which future empirical research needs to address.