• What is the current state of knowledge about the R&D activities of MNEs? • How are these activities likely to change in the future? • How are technological and geopolitical developments in the world economy driving product, process, and business model innovations? • How are these developments impacting both the geographical configuration of GVCs and their organization? • How can government policies encourage innovation and promote the domestic capture of the rents therefrom? Overview of the main issues addressed by the panel Innovation underpins firms’ competitiveness and sustainable performance. For multinational enterprises (MNEs) which compete in global markets, innovation has long been recognized (see, for example, Vernon 1966) as essential not just to growth and success but fundamentally to survival (Papanastassiou et al., 2020). Innovations may be developed in-house and/or acquired externally through different forms of knowledge sourcing such as acquisitions, strategic alliances, and R&D cooperation (Kafouros et al., 2022). MNEs are not only the seedbed for many innovations through their R&D activities at home and abroad, but they also facilitate the diffusion of new innovations across national borders. MNEs are thus important conduits for cross-border knowledge transfer, from the headquarters to overseas affiliates, from overseas affiliates to the headquarters, and/or between affiliates. Organizations like the MNEs have been characterised by the effort to continuously look inward and outward for new knowledge in the attempt to develop new idea and artifacts. MNEs consist of geographically dispersed organizational units that reconfigure themselves to allow more distant and peripheral knowledge search. Research shows that that this ability depends not only on idiosyncrasies specific to the MNE, but also on exogenous forces associated with international variations in appropriability regimes and industry-specific technological opportunities (Kafouros et al., 2012; Dachs et al., 2023). Scholars have stressed the crucial role of globalizing R&D for MNEs aiming to access new technologies (Penner-Hahn and Shaver, 2005) and researched the conditions that induce MNEs to globalise their R&D, and emphasise the role of technological capabilities of the lab and external embeddedness in the local scientific and engineering communities (Song et al., 2011). Geographic dispersion is found to enhance the effects of a firm’s own R&D on its performance (Kafouros et al., 2018). A closer examination of this research area reveals a notable trend in the internationalization of R&D activities, shifting from more developed North to encompass the emerging South (Zhao, Tan, Papanastassiou, Harzing, 2019). This shift was primarily driven by the growing need for advanced-economy MNEs to monitor and understand emerging global trends. This necessity led to a shift towards sourcing knowledge inputs from diverse channels, further propelled by the rising costs of R&D and a shortage of R&D professionals in industrialized nations. Consequently, there has been a strategic (re)alignment in global innovation efforts, emphasizing the maximization of locally developed knowledge while also capturing and synthesizing locally available knowledge, both in North and South (Dodourova, Zhao & Harzing, 2021). Additionally, Southern markets and institutions have witnessed substantial improvements. The convergence of these factors, combined with advancements in information technologies for knowledge management, has led to a shift in the center of gravity for innovation towards the South. This shift has resulted in the establishment of more sustainable competitive advantages by aligning global knowledge networks within and outside the MNEs (Mavroudi, Kafouros, Jia & Hong, 2023). However, this trend is increasingly being disrupted by significant changes in the global economy. One of these disruptions is the rapid technological catch-up and indigenous innovation by EMNEs, partly accelerated by the ‘Tech Cold War’. Specifically, FDI flows from these emerging economies have emerged as a dominant force reshaping the global innovation landscape (Zhao et al., 2020). The rapid rise of EMNEs has spurred comprehensive investigations into various aspects, including the sources and patterns of knowledge flows, as well as the intricate processes of knowledge management and related outcomes (Elia, Kafouros & Buckley, 2020). One area of research has highlighted the innovation impact of EMNEs’ OFDI, particularly when directed towards advanced economies (e.g., Thakur-Wernz, et al., 2019; Wu & Park, 2019).