Multinational ownership and R&D intensity: The role of external knowledge sources and spillovers
AbstractThis paper analyzes the drivers of multinational affiliates' R&D intensity, using a unique dataset based on the fourth Community Innovation Survey for Belgium. Specifically, we investigate the role of foreign affiliates' local (host country) embeddedness and of host country spillovers on foreign affiliates' research efforts. Our findings show that foreign affiliates who are able to tap into local knowledge sources demonstrate a higher research intensity, compared to firms lacking such access. Links to clients and public research institutions, in particular, have a powerful impetus on the research effort by foreign subsidiaries. Our findings suggest a complementary relationship between foreign firms' R&D intensity and the internal research efforts of their competitors as a result of demonstration effects, while the use of external R&D by competitors has a negative impact on the research effort of foreign affiliates as a result of technological spillovers. Our findings have important policy implications, especially in terms of the high dependency of the Belgian economy on foreign R&D. One way to attain the R&D intensity put forward by the Lisbon agenda would be to increase public expenditure on research and development, which would also indirectly increase the research intensity of (foreign) firms.
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Bibliographic InfoPaper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 24209.
Date of creation: 2009
Date of revision:
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R& D intensity; multinational ownership; knowledge sources; spillovers;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-11 (All new papers)
- NEP-CSE-2009-07-11 (Economics of Strategic Management)
- NEP-INO-2009-07-11 (Innovation)
- NEP-KNM-2009-07-11 (Knowledge Management & Knowledge Economy)
- NEP-MIC-2009-07-11 (Microeconomics)
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