The returns to foreign R&D

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Scopus)

Abstract

Extant research on research and development (R&D) internationalization has not examined how effective foreign R&D investments are in generating positive returns for the investing firms, in particular in comparison and conjunction with the effects of domestic R&D investments. We examine the effectiveness of international knowledge sourcing through foreign R&D in an empirical analysis of the productivity effects of foreign and domestic R&D investments in a large panel of firms based in the Netherlands. We argue that foreign and domestic R&D will exhibit complementarity in their effects on productivity, but that the roles of domestic and foreign R&D depend on the relative position of the home country with respect to the global technology frontier and the related relative opportunities for knowledge sourcing abroad. We estimate a dynamic panel data model derived from a knowledge stock augmented production function framework allowing for productivity convergence and declining returns to R&D. We confirm that for firms active in industries in which the home country is behind the global technology frontier, foreign R&D provides positive returns and has a complementary relationship with domestic R&D. For industries at the global technology frontier, in contrast, domestic R&D is the primary source of productivity growth.
Original languageEnglish
Pages (from-to)491-504
Number of pages14
JournalJournal of International Business Studies
Volume46
Issue number4
DOIs
Publication statusPublished - May 2015

Keywords

  • foreign R&D
  • multinational corporations (MNCs) and enterprises (MNEs)
  • innovation and R&D
  • productivity
  • DIRECT-INVESTMENT
  • MULTINATIONAL-ENTERPRISES
  • KNOWLEDGE SPILLOVERS
  • ABSORPTIVE-CAPACITY
  • FIRM SIZE
  • INNOVATION
  • PRODUCTIVITY
  • LOCATION
  • US
  • ABROAD

Cite this

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title = "The returns to foreign R&D",
abstract = "Extant research on research and development (R&D) internationalization has not examined how effective foreign R&D investments are in generating positive returns for the investing firms, in particular in comparison and conjunction with the effects of domestic R&D investments. We examine the effectiveness of international knowledge sourcing through foreign R&D in an empirical analysis of the productivity effects of foreign and domestic R&D investments in a large panel of firms based in the Netherlands. We argue that foreign and domestic R&D will exhibit complementarity in their effects on productivity, but that the roles of domestic and foreign R&D depend on the relative position of the home country with respect to the global technology frontier and the related relative opportunities for knowledge sourcing abroad. We estimate a dynamic panel data model derived from a knowledge stock augmented production function framework allowing for productivity convergence and declining returns to R&D. We confirm that for firms active in industries in which the home country is behind the global technology frontier, foreign R&D provides positive returns and has a complementary relationship with domestic R&D. For industries at the global technology frontier, in contrast, domestic R&D is the primary source of productivity growth.",
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author = "R.A. Belderbos and B. Lokshin and B. Sadowski",
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language = "English",
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The returns to foreign R&D. / Belderbos, R.A.; Lokshin, B.; Sadowski, B.

In: Journal of International Business Studies, Vol. 46, No. 4, 05.2015, p. 491-504.

Research output: Contribution to journalArticleAcademicpeer-review

TY - JOUR

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AU - Belderbos, R.A.

AU - Lokshin, B.

AU - Sadowski, B.

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AB - Extant research on research and development (R&D) internationalization has not examined how effective foreign R&D investments are in generating positive returns for the investing firms, in particular in comparison and conjunction with the effects of domestic R&D investments. We examine the effectiveness of international knowledge sourcing through foreign R&D in an empirical analysis of the productivity effects of foreign and domestic R&D investments in a large panel of firms based in the Netherlands. We argue that foreign and domestic R&D will exhibit complementarity in their effects on productivity, but that the roles of domestic and foreign R&D depend on the relative position of the home country with respect to the global technology frontier and the related relative opportunities for knowledge sourcing abroad. We estimate a dynamic panel data model derived from a knowledge stock augmented production function framework allowing for productivity convergence and declining returns to R&D. We confirm that for firms active in industries in which the home country is behind the global technology frontier, foreign R&D provides positive returns and has a complementary relationship with domestic R&D. For industries at the global technology frontier, in contrast, domestic R&D is the primary source of productivity growth.

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