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The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation

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  • Walter Kuemmerle

    (Harvard Business School)

Abstract

This paper examines the determinants of foreign direct investment (FDI) in research and development laboratories by 32 multinational enterprises in the pharmaceutical and electronics industries. The paper applies a dichotomous set of motives for FDI. Results from an econometric analysis of 136 laboratory investments show that relative market size and relative strength of a country's science base determine whether FDI in research and development is carried out in order to exploit existing firm-specific advantages, or in order to build up new firm-specific advantages. This holds true in similar form for Japanese, European and U.S. firms and across the two industries.© 1999 JIBS. Journal of International Business Studies (1999) 30, 1–24

Suggested Citation

  • Walter Kuemmerle, 1999. "The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 1-24, March.
  • Handle: RePEc:pal:jintbs:v:30:y:1999:i:1:p:1-24
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