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Unbundling R&D and Manufacturing: Postindustrial Myth or Economic Reality?

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  • Mikko Ketokivi
  • Jyrki Ali‐Yrkkö

Abstract

Understanding determinants of business location decisions is important from the point of view of economic policy. While the determinants of manufacturing and R&D location have been extensively covered in the literature, in this article we examine a largely neglected question: Under what conditions do manufacturing and R&D have to be physically colocated, that is, when is unbundling the two impossible? In a sample of 241 Finnish industrial firms, we find that unbundling R&D and manufacturing is possible for some companies but indeed a postindustrial myth of sorts for many others. The need for colocation correlates with knowledge intensity of activities: product complexity, process complexity, and industry rate of change, but interestingly enough, not with the size of the firm's R&D budget.

Suggested Citation

  • Mikko Ketokivi & Jyrki Ali‐Yrkkö, 2009. "Unbundling R&D and Manufacturing: Postindustrial Myth or Economic Reality?," Review of Policy Research, Policy Studies Organization, vol. 26(1‐2), pages 35-54, January.
    • Handle: RePEc:bla:revpol:v:26:y:2009:i:1-2:p:35-54
    DOI: 10.1111/j.1541-1338.2008.00368.x
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    Cited by:

    1. Pietro Moncada-Paternò-Castello & Marco Vivarelli & Peter Voigt, 2011. "Drivers and impacts in the globalization of corporate R&D: an introduction based on the European experience," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 20(2), pages 585-603, April.
    2. Liu, Ju, 2015. "A Case Study on Multinational Companies’ Global Innovation Networks and Global Production Networks: Toward a Theoretical Conceptualisation," Papers in Innovation Studies 2015/45, Lund University, CIRCLE - Centre for Innovation Research.
    3. Liu, Ju & Chaminade, Cristina, 2014. "Exploring the interplay, differences, and commonalities between global production networks and global innovation networks of two multinational companies," Papers in Innovation Studies 2014/7, Lund University, CIRCLE - Centre for Innovation Research.
    4. Dachs, Bernhard, 2017. "Internationalisation of R&D: A Review of Drivers, Impacts, and new Lines of Research," MPRA Paper 83367, University Library of Munich, Germany.
    5. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    6. Inge Ivarsson & Claes Göran Alvstam, 2017. "New technology development by Swedish MNEs in emerging markets: the role of co-location of R&D and production," Asian Business & Management, Palgrave Macmillan, vol. 16(1), pages 92-116, April.
    7. Bernhard Dachs & Bernd Ebersberger & Steffen Kinkel & Oliver Som, 2015. "The effects of production offshoring on R&D and innovation in the home country," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 9-31, March.
    8. Juan Alcácer & Mercedes Delgado, 2016. "Spatial Organization of Firms and Location Choices Through the Value Chain," Management Science, INFORMS, vol. 62(11), pages 3213-3234, November.
    9. René Belderbos & Marcelina Grabowska & Stijn Kelchtermans & Bart Leten & Jojo Jacob & Massimo Riccaboni, 2021. "Whither geographic proximity? Bypassing local R&D units in foreign university collaboration," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(7), pages 1302-1330, September.
    10. Jadranka Švarc & Marina Dabić, 2017. "Evolution of the Knowledge Economy: a Historical Perspective with an Application to the Case of Europe," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(1), pages 159-176, March.
    11. Shih, Yu-Yuan & Lin, Chih-An, 2022. "Co-location with marketing value activities as manufacturing upgrading in a COVID-19 outbreak era," Journal of Business Research, Elsevier, vol. 148(C), pages 410-419.
    12. Davide Castellani & Katiuscia Lavoratori, 2020. "The lab and the plant: Offshore R&D and co-location with production activities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(1), pages 121-137, February.
    13. Sarah Franz, 2021. "The evolution of innovative activity in Asian emerging market subsidiaries of Western MNC’s: the case of Bühler India," Asian Business & Management, Palgrave Macmillan, vol. 20(1), pages 105-130, February.
    14. Annekatrin Niebuhr & Jan Cornelius Peters & Alex Schmidke, 2020. "Spatial sorting of innovative firms and heterogeneous effects of agglomeration on innovation in Germany," The Journal of Technology Transfer, Springer, vol. 45(5), pages 1343-1375, October.
    15. McIvor, Ronan & Bals, Lydia, 2021. "A multi-theory framework for understanding the reshoring decision," International Business Review, Elsevier, vol. 30(6).
    16. John V. Gray & Enno Siemsen & Gurneeta Vasudeva, 2015. "Colocation Still Matters: Conformance Quality and the Interdependence of R&D and Manufacturing in the Pharmaceutical Industry," Management Science, INFORMS, vol. 61(11), pages 2760-2781, November.
    17. Aittomäki, Akseli & Martikainen, Pekka & Laaksonen, Mikko & Lahelma, Eero & Rahkonen, Ossi, 2012. "Household economic resources, labour-market advantage and health problems – A study on causal relationships using prospective register data," Social Science & Medicine, Elsevier, vol. 75(7), pages 1303-1310.
    18. Coad, Alex & Vezzani, Antonio, 2019. "Three cheers for industry: Is manufacturing linked to R&D, exports, and productivity growth?," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 14-25.
    19. Andrea Coveri & Antonello Zanfei, 2023. "The virtues and limits of specialization in global value chains: analysis and policy implications," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(1), pages 73-90, March.
    20. Mariachiara Barzotto & Lisa De Propris, 2021. "The value of firm linkages in the age of industry 4.0: a qualitative comparative analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(2), pages 245-272, October.
    21. Isabel Tecu, 2013. "The Location of Industrial Innovation: Does Manufacturing Matter?," Working Papers 13-09, Center for Economic Studies, U.S. Census Bureau.
    22. Davide Castellani & Katiuscia Lavoratori, 2017. "Location of R&D abroad. An analysis on Global Cities," John H Dunning Centre for International Business Discussion Papers jhd-dp2017-03, Henley Business School, University of Reading.
    23. Emanuela Todeva & Ruslan Rakhmatullin, 2016. "Industry Global Value Chains, Connectivity and Regional Smart Specialisation in Europe. An Overview of Theoretical Approaches and Mapping Methodologies," JRC Research Reports JRC102801, Joint Research Centre.
    24. Pietro Moncada-Paterno-Castello & Peter Voigt & Marco Vivarelli, 2011. "Evolution of Globalised business R&D: Features, drivers, impacts," JRC Working Papers on Corporate R&D and Innovation 2011-02, Joint Research Centre.

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