This paper studies the relative relevance of domestic knowledge sources for innovation in internationalized production activities in an emerging economy. Two Production Networks from Argentina with a different kind of internationalization were considered: organized around subsidiaries of multinational companies (the automotive case) and organized around local headquarters (the iron and steel case). A multiple factor analysis was carried out and cluster techniques were applied using a specific innovation survey done to 163 automotive and iron and steel firms from Argentina from the period of 2001 to2005, to evaluate the relative importance of domestic and foreign knowledge sources. The main finding is that in a production network organized around domestic headquarters the best innovative performance underrates the importance of international linkages, in comparison with networks organized around foreign subsidiaries.
