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Determinants of Swiss Firms’ R&D Activities at Foreign Locations: An Empirical Analysis Based on Firm-level Data

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Author Info
Spyros Arvanitis () (KOF Swiss Economic Institute, ETH Zurich)
Heinz Hollenstein () (KOF Swiss Economic Institute, ETH Zurich)

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Abstract

Using the OLI paradigm as theoretical framework, we explain econometrically why a firm invests in foreign R&D (model A), and, if it does, which factors determine the level of foreign R&D expenditures (model B). It turns out that the pattern of explanation is quite similar for both types of decisions. In both cases, O- and I-advantages are the main drivers of foreign R&D, whereas L-disadvantages of the Swiss location do not play any role. A descriptive analysis of a series of motives of Swiss firms for performing R&D abroad shows that market-seeking is the most important motive. Knowledge-seeking and (human) resource-seeking are of intermediate importance as motives of foreign R&D, whereas efficiency-seeking objectives are hardly relevant. These results are fully in line with those of the econometric modelling. The findings of both approaches imply that foreign and domestic R&D are complements rather than substitutes. “Asset exploiting” is more prevalent as a strategy of foreign R&D than “asset augmenting”.

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Publisher Info
Paper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 06-127.

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Length: 30 pages
Date of creation: Jan 2006
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Handle: RePEc:kof:wpskof:06-127

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Related research
Keywords: Foreign R&D; Determinants of foreign R&D; Motives of foreign R&D; OLI paradigm; Asset augmenting; Asset exploiting;

Find related papers by JEL classification:
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michel, Julie, 2007. "The effects of FDI in R&D on home countries, the case of Switzerland," MPRA Paper 6400, University Library of Munich, Germany. [Downloadable!]
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