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Determinants of Swiss firms' R&D activities at foreign locations

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Abstract

Using the OLI paradigm as theoretical framework, we explain econometrically why a firm invests in foreign R&D (model A), and, if it does, which factors determine the level of foreign R&D expenditures (model B). It turns out that the pattern of explanation is quite similar for both types of decisions. In both cases, O- and I-advantages are the main drivers of foreign R&D, whereas L-disadvantages of the Swiss location do not play any role. A descriptive analysis of a series of motives of Swiss firms for performing R&D abroad shows that market-seeking is the most important motive. Knowledge-seeking and (human) resource-seeking are of intermediate importance as motives of foreign R&D, whereas efficiency-seeking objectives are hardly relevant. These results are fully in line with those of the econometric modelling. The findings of both approaches imply that foreign and domestic R&D are complements rather than substitutes. "Asset exploiting" is more prevalent as a strategy of foreign R&D than "asset augmenting" .

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  • Spyros Arvanitis & Heinz Hollenstein, 2006. "Determinants of Swiss firms' R&D activities at foreign locations," KOF Working papers 06-127, KOF Swiss Economic Institute, ETH Zurich.
    • Handle: RePEc:kof:wpskof:06-127
    DOI: 10.3929/ethz-a-005118434
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    Cited by:

    1. Tiwari, Rajnish & Buse, Stephan & Herstatt, Cornelius, 2007. "Innovation via global route: Proposing a reference model for chances and challenges of global innovation processes," Working Papers 49, Hamburg University of Technology (TUHH), Institute for Technology and Innovation Management.
    2. Heinz Hollenstein, 2009. "Characteristics of Foreign R&D Strategies of Swiss Firms: Implications for Policy," Chapters, in: Dominique Foray (ed.), The New Economics of Technology Policy, chapter 19, Edward Elgar Publishing.
    3. Michel, Julie, 2007. "The effects of FDI in R&D on home countries, the case of Switzerland," MPRA Paper 6400, University Library of Munich, Germany.
    4. Wixted, Brian, 2006. "Cluster Complexes: A Framework for Understanding the Internationalisation of Innovation Systems," MPRA Paper 846, University Library of Munich, Germany.
    5. Spyros Arvanitis & Heinz Hollenstein, 2010. "How Do Different Motives for R&D Investment in Foreign Locations Affect Domestic Firm Performance? An Analysis Based on Swiss Panel Micro Data," WIFO Working Papers 375, WIFO.
    6. Dachs, Bernhard, 2017. "Internationalisation of R&D: A Review of Drivers, Impacts, and new Lines of Research," MPRA Paper 83367, University Library of Munich, Germany.
    7. Spyros Arvanitis & Heinz Hollenstein, 2010. "How Do Different Motives for R&D Investment in Foreign Locations Affect Domestic Firm Performance?," KOF Working papers 10-258, KOF Swiss Economic Institute, ETH Zurich.
    8. Martin Berger & Heinz Hollenstein, 2012. "Determinants of equity-based and co-operative foreign R&D and impact on the parent firm's performance," KOF Working papers 12-305, KOF Swiss Economic Institute, ETH Zurich.

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    Keywords

    Foreign R&D; Determinants of foreign R&D; Motives of foreign R&D; OLI paradigm; Asset augmenting; Asset exploiting;
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