The role of R&D resource commitment in accessing co-location advantages

In a globalized economy, multinational enterprises (MNEs) pursue competitiveness through cross-border knowledge exploitation and exploration in international R&D. It is conventionally assumed that for subsidiaries to effectively access co-location advantages in knowledge milieus abroad, high levels of resource commitment are required. This paper analyses the relationship between resource commitment and access to co-location advantages, first theoretically and then through a case study of two MNEs in high-tech industries. We disaggregate the composite concept of resource commitment and demonstrate the dimensions accentuated, respectively, by the resource-based view, transaction cost economics and institutional theory. Next, we analyse the relationship between resource commitment and co-location advantages for 11 R&D subsidiaries of the two MNEs. Based on this analysis, we discuss the relationships between the empirical findings and the theoretically differentiated resource commitment dimensions. The study finds that high resource levels are less important for access to co-location advantages than conventionally assumed, while the level of commitment associated with allocated resources appears consistently to be important, lending more support for the relevance of institutional theory-related dimensions of resource commitment than the resource-based view-related ones. We also find support for the claim that more flexible governance arrangements promote access to co-location advantages in asset exploration.