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R&D intensity for innovative and adaptive purposes in overseas subsidiaries: Evidence from Japanese multinational enterprises

  • Todo, Yasuyuki
  • Shimizutani, Satoshi

This paper investigates the causes of R&D activities of overseas subsidiaries using firm-level panel data for Japanese multinationals. We distinguish between overseas innovative R&D (basic and applied research) and adaptive R&D (development and design) and examine how the intensity of each type of R&D is determined, using Amemiya Generalized Least Squares estimation. Our findings suggest that overseas innovative R&D aims at the exploitation of foreign knowledge, whereas adaptive R&D has no such aim. In addition, the size of the host country's market positively affects both types, whereas geographic distance between the host and the home country has a negative impact. Finally, the parent firm's knowledge is found to increase the size of overseas adaptive R&D but not innovative R&D. Based on a theoretical model, we interpret this evidence as showing that knowledge of the parent firm is not fully utilized in innovative R&D of its subsidiary.

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Article provided by Elsevier in its journal Research in International Business and Finance.

Volume (Year): 23 (2009)
Issue (Month): 1 (January)
Pages: 31-45

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Handle: RePEc:eee:riibaf:v:23:y:2009:i:1:p:31-45
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