IDEAS home Printed from https://ideas.repec.org/a/eee/iburev/v13y2004i3p359-382.html
   My bibliography  Save this article

Subsidiary research and development, and the local environment

Author

Listed:
  • Davis, Lee N.
  • Meyer, Klaus E.

Abstract

Multinational enterprises (MNEs) increasingly seek to optimise their global innovative capabilities by incorporating subsidiary-specific advantages in different countries. But how important are the different location advantages for subsidiary investments in research and development? This paper adds to our understanding of the effects of commonly cited location advantages by analysing the degree to which they actually influence the incidence and level of subsidiary R&D. We developed hypotheses from the existing literature on location advantages, multinational R&D, and innovation incentives, and tested them in relation to an empirical data set containing over 2000 responses from subsidiary managers in seven countries in Europe. Four aspects of the local business environment were investigated: competitive conditions, supply conditions, scientific institutions, and government support. We found that only the presence of scientific institutions has a consistent, positive effect on the incidence and level of subsidiary R&D. Government support has a positive effect on the incidence of subsidiary R&D, but not its level. However, highly competitive environments have a negative effect, at least in small countries.

Suggested Citation

  • Davis, Lee N. & Meyer, Klaus E., 2004. "Subsidiary research and development, and the local environment," International Business Review, Elsevier, vol. 13(3), pages 359-382, June.
    • Handle: RePEc:eee:iburev:v:13:y:2004:i:3:p:359-382
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969593104000228
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    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. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
    2. Merges, Robert P. & Nelson, Richard R., 1994. "On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 25(1), pages 1-24, September.
    3. Robert C Ronstadt, 1978. "International R & D: The Establishment and Evolution of Research and Development Abroad by Seven U.S. Multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 9(1), pages 7-24, March.
    4. Lawson, Clive, 1999. "Towards a Competence Theory of the Region," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 23(2), pages 151-166, March.
    5. 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.
    6. Papanastassiou, Marina, 1999. "Technology and production strategies of multinational enterprise (MNE) subsidiaries in Europe," International Business Review, Elsevier, vol. 8(2), pages 213-232, April.
    7. Peter W. Roberts, 1999. "Product innovation, product–market competition and persistent profitability in the U.S. pharmaceutical industry," Strategic Management Journal, Wiley Blackwell, vol. 20(7), pages 655-670, July.
    8. repec:bla:econom:v:46:y:1979:i:182:p:187-96 is not listed on IDEAS
    9. 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.
    10. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    11. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    12. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    13. Jaideep Anand & Bruce Kogut, 1997. "Technological Capabilities of Countries, Firm Rivalry and Foreign Direct Investments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(3), pages 445-465, September.
    14. Andersson, Ulf & Forsgren, Mats & Pedersen, Torben, 2001. "Subsidiary performance in multinational corporations: the importance of technology embeddedness," International Business Review, Elsevier, vol. 10(1), pages 3-23, February.
    15. Klaus E Meyer & Saul Estrin, 2001. "Brownfield Entry in Emerging Markets," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(3), pages 575-584, September.
    16. 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.
    17. M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
    18. Patel, Pari & Vega, Modesto, 1999. "Patterns of internationalisation of corporate technology: location vs. home country advantages1," Research Policy, Elsevier, vol. 28(2-3), pages 145-155, March.
    19. Stanley M. Besen & Leo J. Raskind, 1991. "An Introduction to the Law and Economics of Intellectual Property," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 3-27, Winter.
    20. 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.
    21. Christine Oliver, 1997. "Sustainable competitive advantage: combining institutional and resource‐based views," Strategic Management Journal, Wiley Blackwell, vol. 18(9), pages 697-713, October.
    22. Sanjaya Lall, 1985. "The International Allocation of Research Activity by US Multinationals," Palgrave Macmillan Books, in: Multinationals, Technology and Exports, chapter 3, pages 38-64, Palgrave Macmillan.
    23. von Zedtwitz, Maximilian & Gassmann, Oliver, 2002. "Market versus technology drive in R&D internationalization: four different patterns of managing research and development," Research Policy, Elsevier, vol. 31(4), pages 569-588, May.
    24. Pearce, Robert, 1999. "The evolution of technology in multinational enterprises: the role of creative subsidiaries," International Business Review, Elsevier, vol. 8(2), pages 125-148, April.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    2. 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.
    3. 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.
    4. Bas, Christian Le & Sierra, Christophe, 2002. "'Location versus home country advantages' in R&D activities: some further results on multinationals' locational strategies," Research Policy, Elsevier, vol. 31(4), pages 589-609, May.
    5. 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.
    6. 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.
    7. Achcaoucaou, Fariza & Miravitlles, Paloma & León-Darder, Fidel, 2014. "Knowledge sharing and subsidiary R&D mandate development: A matter of dual embeddedness," International Business Review, Elsevier, vol. 23(1), pages 76-90.
    8. Qin Yang & Crystal Jiang, 2007. "Location advantages and subsidiaries’ R&D activities in emerging economies: Exploring the effect of employee mobility," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 341-358, September.
    9. 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.
    10. 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.
    11. 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.
    12. Shasha Zhao & Hui Tan & Marina Papanastassiou & Anne-Wil Harzing, 2020. "The internationalization of innovation towards the South: A historical case study of a global pharmaceutical corporation in China (1993–2017)," Asia Pacific Journal of Management, Springer, vol. 37(2), pages 553-585, June.
    13. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    14. Rajaram Veliyath & Rakesh B. Sambharya, 2011. "R&D Investments of Multinational Corporations," Management International Review, Springer, vol. 51(3), pages 407-428, June.
    15. Blomkvist, Katarina & Kappen, Philip & Zander, Ivo, 2017. "Gone are the creatures of yesteryear? On the diffusion of technological capabilities in the ‘modern’ MNC," Journal of World Business, Elsevier, vol. 52(1), pages 1-16.
    16. Eric Rugraff, 2017. "A Patent Analysis Of Foreign Direct Innovative R&D Activities In Central Europe: The Czech Case," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 21(02), pages 1-28, February.
    17. Liu, Meng-chun & Chen, Shin-Horng, 2012. "MNCs’ offshore R&D networks in host country's regional innovation system: The case of Taiwan-based firms in China," Research Policy, Elsevier, vol. 41(6), pages 1107-1120.
    18. Di Minin, Alberto & Zhang, Jieyin & Gammeltoft, Peter, 2012. "Chinese foreign direct investment in R&D in Europe: A new model of R&D internationalization?," European Management Journal, Elsevier, vol. 30(3), pages 189-203.
    19. Ambos, Björn & Schlegelmilch, Bodo B., 2004. "The use of international R&D teams: an empirical investigation of selected contingency factors," Journal of World Business, Elsevier, vol. 39(1), pages 37-48, February.
    20. 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.

    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:eee:iburev:v:13:y:2004:i:3:p:359-382. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/description#description .

    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.