Abstract
This article examines the evolution of the industrial structure of local technological development by U.S.-owned multinational enterprises (MNEs) in the United Kingdom in the 1950s and over the more recent period 1969–1995. Using a survey of U.S. subsidiaries in the United Kingdom and more recent data on patents granted in the United States to the largest MNEs, the article illustrates the effect of a shift toward internationally integrated strategies for corporate technological development. The local innovation of MNEs has moved closer to the industries of host country technological advantage, and hence to utilising location-specific capabilities as a source of competitive advantage in the MNE. We interpret this as a shift from an asset-exploiting toward an asset-augmenting form of foreign direct investment (FDI).