Research output

The returns to foreign R&D

Research output: Contribution to journalArticleAcademicpeer-review

Associated researcher

Associated organisations

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.

    Research areas

  • 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
View graph of relations

Details

Original languageEnglish
Pages (from-to)491-504
Number of pages14
JournalJournal of International Business Studies
Volume46
Issue number4
DOIs
Publication statusPublished - May 2015