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Does Excellence in Academic Research Attract Foreign R&D?

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  • Belderbos, Rene
  • Leten, Bart
  • Suzuki, Shinya

Abstract

We examine the role of host countries’ academic research strengths in global R&D location decisions by multinational firms. While we expect that a firm’s propensity to perform R&D in a host country increases with the strength of local academic research, firms are expected to be heterogeneously positioned to benefit from academic research strengths due to differences in the capacity to absorb and utilize scientific knowledge. We find support for these conjectures in an analysis of foreign R&D activities in 40 host countries and 30 technology fields by 176 leading European, US and Japanese firms during the periods 1995-1998 and 1999-2002. Controlling for a wide range of host country factors, the number of relevant ISI publications by scientists based in the host country has a substantial positive impact on the propensity to conduct foreign R&D. The effect of academic research is significantly larger for firms with a stronger science orientation in R&D - as indicated by citations to scientific literature in prior patents. For host countries with a strong relevant science base, this greater responsiveness of science oriented firms more than offsets a generally greater inclination to concentrate R&D at home. The findings appear robust across a variety of specifications.

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Paper provided by Katholieke Universiteit Leuven in its series Open Access publications from Katholieke Universiteit Leuven with number urn:hdl:123456789/252486.

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Date of creation: Nov 2009
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Handle: RePEc:ner:leuven:urn:hdl:123456789/252486

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  1. Local academic research is good for firm R&D
    by Economic Logician in Economic Logic on 2010-04-09 14:17:00
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Cited by:
  1. Berliant, Marcus & Fujita, Masahisa, 2011. "Culture and diversity in knowledge creation," MPRA Paper 27997, University Library of Munich, Germany.
  2. Leten, Bart & Landoni, Paolo & Van Looy, Bart, 2007. "Developing technology in the vicinity of science: Do firms really benefit? An empirical assessment on the level of Italian provinces," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/214066, Katholieke Universiteit Leuven.

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