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Home base-compensating R&D: Indicators, public policy, and ramifications for multinational firms

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  • Lehrer, Mark
  • Asakawa, Kazuhiro
  • Behnam, Michael
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    Abstract

    The situation in which a multinational firm compensates for comparative weakness in home-country R&D by locating vital R&D activities in foreign countries with a stronger R&D base has generally been considered a fairly marginal phenomenon. Yet home base-compensating R&D by MNCs is more prevalent and more important in its effects than generally assumed. Given intensifying competition among nations for R&D investment by MNCs, home base-compensating R&D may help stimulate R&D reform in the home country, as illustrated with the example of German biotechnology. The probability that home base-compensating R&D can stimulate R&D reform in the firm's home country is highest when practiced by "high-profile players" in sectors that are science-based and that are either strategic (inter-industry economic and knowledge spillovers), feature above-average growth, and/or are of high political importance. To the extent that home base-compensating R&D by MNCs can potentially encourage policy reforms in their home country, this adds a new level of complexity to discussions about the role of corporations in influencing public policy as a component of their corporate social responsibility.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Management.

    Volume (Year): 17 (2011)
    Issue (Month): 1 (March)
    Pages: 42-53

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    Handle: RePEc:eee:intman:v:17:y:2011:i:1:p:42-53

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    Related research

    Keywords: Home base-compensating R&D Multinational corporations National systems of innovation R&D reform Public policy Germany Biotechnology;

    References

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