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The returns to foreign R&D

Author

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  • René Belderbos

    (1] Department of Managerial Economics, Strategy and Innovation, University of Leuven, Leuven, Belgium[2] Department of Organization and Strategy, School of Business and Economics, University of Maastricht, Maastricht, The Netherlands[3] UNU-MERIT, Maastricht, The Netherlands)

  • Boris Lokshin

    (Department of Organization and Strategy, School of Business and Economics, University of Maastricht, Maastricht, The Netherlands)

  • Bert Sadowski

    (Eindhoven University of Technology, Eindhoven, The Netherlands)

Abstract

Extant research on research and development (R&D) internationalization has not examined how effective foreign R&D investments are in generating positive returns for the investing firms, in particular in comparison and conjunction with the effects of domestic R&D investments. We examine the effectiveness of international knowledge sourcing through foreign R&D in an empirical analysis of the productivity effects of foreign and domestic R&D investments in a large panel of firms based in the Netherlands. We argue that foreign and domestic R&D will exhibit complementarity in their effects on productivity, but that the roles of domestic and foreign R&D depend on the relative position of the home country with respect to the global technology frontier and the related relative opportunities for knowledge sourcing abroad. We estimate a dynamic panel data model derived from a knowledge stock augmented production function framework allowing for productivity convergence and declining returns to R&D. We confirm that for firms active in industries in which the home country is behind the global technology frontier, foreign R&D provides positive returns and has a complementary relationship with domestic R&D. For industries at the global technology frontier, in contrast, domestic R&D is the primary source of productivity growth.

Suggested Citation

  • René Belderbos & Boris Lokshin & Bert Sadowski, 2015. "The returns to foreign R&D," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 46(4), pages 491-504, May.
  • Handle: RePEc:pal:jintbs:v:46:y:2015:i:4:p:491-504
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    1. repec:oup:indcch:v:25:y:2016:i:6:p:1019-1038. is not listed on IDEAS
    2. repec:eee:techno:v:70-71:y:2018:i::p:46-58 is not listed on IDEAS
    3. repec:pal:jintbs:v:48:y:2017:i:6:d:10.1057_s41267-017-0083-y is not listed on IDEAS

    More about this item

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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