IDEAS home Printed from https://ideas.repec.org/a/spr/manint/v51y2011i3d10.1007_s11575-011-0079-y.html
   My bibliography  Save this article

R&D Investments of Multinational Corporations

Author

Listed:
  • Rajaram Veliyath

    (Kennesaw State University)

  • Rakesh B. Sambharya

    (Rutgers University-Camden)

Abstract

This paper investigated the influence of country-level factors that have led to shifts in the patterns of international R&D investments made by Multinational Corporations (MNCs), from an exclusive focus on developed countries to a broader scope that also includes developing countries. Differences in a country’s national technological innovation capability, that comprised the country’s capacity for the creation of technology, technology infrastructure and the development of human skills, were the most important factors in attracting R&D investments. Different strategic motivations like home-base exploiting versus home-base augmenting foreign R&D investments are attracted to countries with differing national innovation capabilities. The country’s Intellectual Property Rights (IPR) score was also an important influence on R&D investments. International investor’s experience with the country, as measured by prior FDI inflows, was a critical element in attracting R&D investment inflows.

Suggested Citation

  • Rajaram Veliyath & Rakesh B. Sambharya, 2011. "R&D Investments of Multinational Corporations," Management International Review, Springer, vol. 51(3), pages 407-428, June.
    • Handle: RePEc:spr:manint:v:51:y:2011:i:3:d:10.1007_s11575-011-0079-y
    DOI: 10.1007/s11575-011-0079-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11575-011-0079-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11575-011-0079-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kalle Pajunen, 2008. "Institutions and inflows of foreign direct investment: a fuzzy-set analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(4), pages 652-669, June.
    2. Cefis, Elena & Orsenigo, Luigi, 2001. "The persistence of innovative activities: A cross-countries and cross-sectors comparative analysis," Research Policy, Elsevier, vol. 30(7), pages 1139-1158, August.
    3. Gerybadze, Alexander & Reger, Guido, 1999. "Globalization of R&D: recent changes in the management of innovation in transnational corporations," Research Policy, Elsevier, vol. 28(2-3), pages 251-274, March.
    4. Susan E. Feinberg & Anil K. Gupta, 2004. "Knowledge spillovers and the assignment of R&D responsibilities to foreign subsidiaries," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 823-845, August.
    5. 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.
    6. Greenhalgh, Christine & Rogers, Mark, 2006. "The value of innovation: The interaction of competition, R&D and IP," Research Policy, Elsevier, vol. 35(4), pages 562-580, May.
    7. Hu, Mei-Chih & Mathews, John A., 2005. "National innovative capacity in East Asia," Research Policy, Elsevier, vol. 34(9), pages 1322-1349, November.
    8. Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2005. "Governance matters IV : governance indicators for 1996-2004," Policy Research Working Paper Series 3630, The World Bank.
    9. Susan Bartholomew, 1997. "National Systems of Biotechnology Innovation: Complex Interdependence in the Global System," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(2), pages 241-266, June.
    10. Kumar, Nagesh, 1996. "Intellectual property protection, market orientation and location of overseas R&D activities by multinational enterprises," World Development, Elsevier, vol. 24(4), pages 673-688, April.
    11. Beise, Marian, 2004. "Lead markets: country-specific drivers of the global diffusion of innovations," Research Policy, Elsevier, vol. 33(6-7), pages 997-1018, September.
    12. Susan E Feinberg & Sumit K Majumdar, 2001. "Technology Spillovers from Foreign Direct Investment in the Indian Pharmaceutical Industry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(3), pages 421-437, September.
    13. Lance Eliot Brouthers & Yan Gao & Jason Patrick McNicol, 2008. "Corruption and market attractiveness influences on different types of FDI," Strategic Management Journal, Wiley Blackwell, vol. 29(6), pages 673-680, June.
    14. Ambos, Bjorn, 2005. "Foreign direct investment in industrial research and development: A study of German MNCs," Research Policy, Elsevier, vol. 34(4), pages 395-410, May.
    15. Casper, Steven & Matraves, Catherine, 2003. "Institutional frameworks and innovation in the German and UK pharmaceutical industry," Research Policy, Elsevier, vol. 32(10), pages 1865-1879, December.
    16. Minyuan Zhao, 2006. "Conducting R& D in Countries with Weak Intellectual Property Rights Protection," Management Science, INFORMS, vol. 52(8), pages 1185-1199, August.
    17. Furman, Jeffrey L. & Hayes, Richard, 2004. "Catching up or standing still?: National innovative productivity among 'follower' countries, 1978-1999," Research Policy, Elsevier, vol. 33(9), pages 1329-1354, November.
    18. Blind, Knut & Grupp, Hariolf, 1999. "Interdependencies between the science and technology infrastructure and innovation activities in German regions: empirical findings and policy consequences," Research Policy, Elsevier, vol. 28(5), pages 451-468, June.
    19. Archibugi, Daniele & Coco, Alberto, 2005. "Measuring technological capabilities at the country level: A survey and a menu for choice," Research Policy, Elsevier, vol. 34(2), pages 175-194, March.
    20. Archibugi, Daniele & Coco, Alberto, 2004. "A New Indicator of Technological Capabilities for Developed and Developing Countries (ArCo)," World Development, Elsevier, vol. 32(4), pages 629-654, April.
    21. Sharif, Naubahar, 2006. "Emergence and development of the National Innovation Systems concept," Research Policy, Elsevier, vol. 35(5), pages 745-766, June.
    22. Lall, Sanjaya, 2003. "Indicators of the relative importance of IPRs in developing countries," Research Policy, Elsevier, vol. 32(9), pages 1657-1680, October.
    23. Ginarte, Juan C. & Park, Walter G., 1997. "Determinants of patent rights: A cross-national study," Research Policy, Elsevier, vol. 26(3), pages 283-301, October.
    24. Nigel Driffield & James H Love, 2007. "Linking FDI motivation and host economy productivity effects: conceptual and empirical analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(3), pages 460-473, May.
    25. Christian Bellak, 2005. "Adjustment strategies of multinational enterprises to changing national competitiveness," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 139-162.
    26. Steven Globerman & Daniel Shapiro, 2003. "Governance infrastructure and US foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(1), pages 19-39, January.
    27. Lall, Sanjaya, 2001. "Competitiveness Indices and Developing Countries: An Economic Evaluation of the Global Competitiveness Report," World Development, Elsevier, vol. 29(9), pages 1501-1525, September.
    28. Brent B Allred & Walter G Park, 2007. "Patent rights and innovative activity: evidence from national and firm-level data," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(6), pages 878-900, November.
    29. Fagerberg, Jan & Srholec, Martin, 2008. "National innovation systems, capabilities and economic development," Research Policy, Elsevier, vol. 37(9), pages 1417-1435, October.
    30. John H Dunning, 1988. "The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(1), pages 1-31, March.
    31. Grupp, Hariolf & Schmoch, Ulrich, 1999. "Patent statistics in the age of globalisation: new legal procedures, new analytical methods, new economic interpretation," Research Policy, Elsevier, vol. 28(4), pages 377-396, April.
    32. Thomas P. Murtha & Stefanie Ann Lenway, 1994. "Country capabilities and the strategic state: How national political institutions affect multinational Corporations' Strategies," Strategic Management Journal, Wiley Blackwell, vol. 15(S2), pages 113-129, June.
    33. Sylvie Chetty & Kent Eriksson & Jessica Lindbergh, 2006. "The effect of specificity of experience on a firm's perceived importance of institutional knowledge in an ongoing business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(5), pages 699-712, September.
    34. Desislava Dikova & Arjen van Witteloostuijn, 2007. "Foreign direct investment mode choice: entry and establishment modes in transition economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(6), pages 1013-1033, November.
    35. Cantwell, John & Janne, Odile, 1999. "Technological globalisation and innovative centres: the role of corporate technological leadership and locational hierarchy1," Research Policy, Elsevier, vol. 28(2-3), pages 119-144, March.
    36. David W Loree & Stephen E Guisinger, 1995. "Policy and Non-Policy Determinants of U.S. Equity Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(2), pages 281-299, June.
    37. Ito, Banri & Wakasugi, Ryuhei, 2007. "What factors determine the mode of overseas R&D by multinationals? Empirical evidence," Research Policy, Elsevier, vol. 36(8), pages 1275-1287, October.
    38. William H Davidson, 1980. "The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(2), pages 9-22, June.
    39. Mahmood, Ishtiaq P. & Singh, Jasjit, 2003. "Technological dynamism in Asia," Research Policy, Elsevier, vol. 32(6), pages 1031-1054, June.
    40. ITO Banri & WAKASUGI Ryuhei, 2007. "Factors Determining the Mode of Overseas R&D by Multinationals: Empirical Evidence," Discussion papers 07004, Research Institute of Economy, Trade and Industry (RIETI).
    41. Klaus E Meyer, 2001. "Institutions, Transaction Costs, and Entry Mode Choice in Eastern Europe," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(2), pages 357-367, June.
    42. Nelson, Richard R., 2008. "What enables rapid economic progress: What are the needed institutions," Research Policy, Elsevier, vol. 37(1), pages 1-11, February.
    43. Robert L Ostergard, 2000. "The Measurement of Intellectual Property Rights Protection," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(2), pages 349-360, June.
    44. Lundvall, Bengt-Ake & Johnson, Bjorn & Andersen, Esben Sloth & Dalum, Bent, 2002. "National systems of production, innovation and competence building," Research Policy, Elsevier, vol. 31(2), pages 213-231, February.
    45. Pari Patel & Keith Pavitt, 1991. "Large Firms in the Production of the World’s Technology: An Important Case of “Non-Globalisation”," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 22(1), pages 1-21, March.
    46. Furman, Jeffrey L. & Porter, Michael E. & Stern, Scott, 2002. "The determinants of national innovative capacity," Research Policy, Elsevier, vol. 31(6), pages 899-933, August.
    47. Witold J Henisz, 2003. "The power of the Buckley and Casson thesis: the ability to manage institutional idiosyncrasies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(2), pages 173-184, March.
    48. James Love, 2003. "Technology sourcing versus technology exploitation: an analysis of US foreign direct investment flows," Applied Economics, Taylor & Francis Journals, vol. 35(15), pages 1667-1678.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xing Gao & Keyu Zhai & Yue Qiu & Mengqiu Cao & Meiling Wu, 2020. "Innovation Institution and Spatial Transfer of Energy Industry: The Case of Jiangsu Province, China," SAGE Open, , vol. 10(1), pages 21582440199, January.
    2. Niccolò Pisani & Joan Enric Ricart, 2018. "Offshoring Innovation to Emerging Countries: The Effects of IP Protection and Cultural Differences on Firms’ Decision to Augment Versus Exploit Home-Base-Knowledge," Management International Review, Springer, vol. 58(6), pages 871-909, December.
    3. Zorska, Anna, 2016. "Polityka państwa wobec korporacji transnarodowych i przenoszenie ich prac B+R," Studia z Polityki Publicznej / Public Policy Studies, Warsaw School of Economics, vol. 3(3), pages 1-30, April.
    4. Donnelly, Róisín & Manolova, Tatiana S., 2020. "Foreign location decisions through an institutional lens: A systematic review and future research agenda," International Business Review, Elsevier, vol. 29(4).
    5. Albino-Pimentel, João & Dussauge, Pierre & El Nayal, Omar, 2022. "Intellectual property rights, non-market considerations and foreign R&D investments," Research Policy, Elsevier, vol. 51(2).
    6. Srivardhini K. Jha & Charles Dhanaraj & Rishikesha T. Krishnan, 2018. "From Arbitrage to Global Innovation: Evolution of Multinational R&D in Emerging Markets," Management International Review, Springer, vol. 58(4), pages 633-661, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khoury, Theodore A. & Peng, Mike W., 2011. "Does institutional reform of intellectual property rights lead to more inbound FDI? Evidence from Latin America and the Caribbean," Journal of World Business, Elsevier, vol. 46(3), pages 337-345, July.
    2. Håkanson, Lars & Kappen, Philip, 2016. "Live and let die: A survival analysis of foreign R&D units in Swedish MNEs," International Business Review, Elsevier, vol. 25(6), pages 1185-1196.
    3. Proksch, Dorian & Haberstroh, Marcus Max & Pinkwart, Andreas, 2017. "Increasing the national innovative capacity: Identifying the pathways to success using a comparative method," Technological Forecasting and Social Change, Elsevier, vol. 116(C), pages 256-270.
    4. Schmiele, Anja, 2009. "Drivers for international innovation activities in developed and emerging countries," ZEW Discussion Papers 09-064, ZEW - Leibniz Centre for European Economic Research.
    5. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    6. Lorena D’Agostino, 2015. "The neglected effects of R&D captive offshoring in emerging countries on the creation of knowledge at home," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 61-91, March.
    7. Lorena M. D'Agostino & Grazia D. Santangelo, 2012. "The Global Fragmentation of R&D Activities: The Home Region Perspective," DRUID Working Papers 12-06, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. Nasirov, Shukhrat & Gokh, Irina & Filippaios, Fragkiskos, 2022. "Technological radicalness, R&D internationalization, and the moderating effect of intellectual property protection," Journal of Business Research, Elsevier, vol. 145(C), pages 215-227.
    9. Monika Kondratiuk-Nierodziñska, 2016. "New Knowledge Generation Capabilities And Economic Performance Of Polish Regions," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(3), pages 451-471, September.
    10. Bronwyn H. Hall, 2014. "Does patent protection help or hinder technology transfer?," Chapters, in: Sanghoon Ahn & Bronwyn H. Hall & Keun Lee (ed.), Intellectual Property for Economic Development, chapter 2, pages 11-32, Edward Elgar Publishing.
    11. Anja Schmiele, 2012. "Drivers for international innovation activities in developed and emerging countries," The Journal of Technology Transfer, Springer, vol. 37(1), pages 98-123, February.
    12. de Faria, Pedro & Sofka, Wolfgang, 2010. "Knowledge protection strategies of multinational firms--A cross-country comparison," Research Policy, Elsevier, vol. 39(7), pages 956-968, September.
    13. Patricia Laurens & Christian Le Bas & Antoine Schoen, 2019. "Worldwide IP coverage of patented inventions in large pharma firms: to what extent do the internationalisation of R&D and firm strategy matter?," Post-Print hal-01725229, HAL.
    14. Cozza, Claudio & Franco, Chiara & Perani, Giulio, 2018. "R&D endowments at home driving R&D internationalisation: Evidence from the Italian business R&D survey," Technological Forecasting and Social Change, Elsevier, vol. 134(C), pages 277-289.
    15. Fagerberg, Jan & Srholec, Martin & Verspagen, Bart, 2010. "Innovation and Economic Development," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 833-872, Elsevier.
    16. Chidlow, Agnieszka & Holmström-Lind, Christine & Holm, Ulf & Tallman, Steve, 2015. "Do I stay or do I go? Sub-national drivers for post-entry subsidiary development," International Business Review, Elsevier, vol. 24(2), pages 266-275.
    17. Rakesh B. Sambharya & Jooh Lee, 2014. "Renewing Dynamic Capabilities Globally: An Empirical Study of the World’s Largest MNCs," Management International Review, Springer, vol. 54(2), pages 137-169, April.
    18. Jérôme Danguy, 2017. "Globalization of innovation production: A patent-based industry analysis," Science and Public Policy, Oxford University Press, vol. 44(1), pages 75-94.
    19. Yoo, Dasun & Reimann, Felix, 2017. "Internationalization of Developing Country Firms into Developed Countries: The Role of Host Country Knowledge-Based Assets and IPR Protection in FDI Location Choice," Journal of International Management, Elsevier, vol. 23(3), pages 242-254.
    20. Lee, Sangwon & Nam, Yoonjae & Lee, Seonmi & Son, Hyunjung, 2016. "Determinants of ICT innovations: A cross-country empirical study," Technological Forecasting and Social Change, Elsevier, vol. 110(C), pages 71-77.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:manint:v:51:y:2011:i:3:d:10.1007_s11575-011-0079-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.