IDEAS home Printed from https://ideas.repec.org/a/unc/tncjou/66.html
   My bibliography  Save this article

Globalization of innovation: the moderating role of project-level investment strategy and country type in location choice for R&D-related FDI

Author

Listed:
  • Eliane Choquette
  • Stine Jessen Haakonsson
  • Peter D. Ørberg Jensen
  • Søren Feodor Nielsen

Abstract

The current stage of globalization involves geographically dispersed research and development (R&D) investments that are not confined to advanced economies. These cross-border R&D investments are driven by multinational enterprises’ (MNEs’) strategies for exploring and/or exploiting foreign locations. In this paper, we analyse location choice and the moderating effect of project-level investment strategy (i.e. exploration or exploitation) and type of host economy (i.e. advanced or emerging) on the importance of the innovation framework and local innovation capabilities. Our analysis of 588 R&D-related foreign direct investment (FDI) projects in the pharmaceutical and biotech industries during the 2006–2016 period reveals that whereas a host country’s innovation framework and capability overall do affect the location decision, their ultimate effects are conditional on the combination of project-level investment strategy and type of economy. Our findings have policy implications for FDI policies aimig at enhancing linkages between MNEs and local actors and national science, technology, innovation and educational policies and programmes.

Suggested Citation

  • Eliane Choquette & Stine Jessen Haakonsson & Peter D. Ørberg Jensen & Søren Feodor Nielsen, . "Globalization of innovation: the moderating role of project-level investment strategy and country type in location choice for R&D-related FDI," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:tncjou:66
    as

    Download full text from publisher

    File URL: https://unctad.org/system/files/non-official-document/diaeia2021d2a1_en.pdf?repec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bruce Kogut & Udo Zander, 1992. "Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology," Organization Science, INFORMS, vol. 3(3), pages 383-397, August.
    2. Freeman, Chris, 2002. "Continental, national and sub-national innovation systems--complementarity and economic growth," Research Policy, Elsevier, vol. 31(2), pages 191-211, February.
    3. Stine Jessen Haakonsson & Peter D. Ørberg Jensen & Susan M. Mudambi, 2013. "A co-evolutionary perspective on the drivers of international sourcing of pharmaceutical R&D to India," Journal of Economic Geography, Oxford University Press, vol. 13(4), pages 677-700, July.
    4. 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.
    5. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    6. Jan Fagerberg & David C Mowery & Bart Verspagen, 2009. "The evolution of Norway's national innovation system," Science and Public Policy, Oxford University Press, vol. 36(6), pages 431-444, July.
    7. Lorena M. D'Agostino & Keld Laursen & Grazia D. Santangelo, 2013. "The impact of R&D offshoring on the home knowledge production of OECD investing regions," Journal of Economic Geography, Oxford University Press, vol. 13(1), pages 145-175, January.
    8. Davide Castellani & Katiuscia Lavoratori, 2020. "The lab and the plant: Offshore R&D and co-location with production activities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(1), pages 121-137, February.
    9. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    10. Hansen, Michael W. & Pedersen, Torben & Petersen, Bent, 2009. "MNC strategies and linkage effects in developing countries," Journal of World Business, Elsevier, vol. 44(2), pages 121-130, April.
    11. Mehmet Demirbag & Keith W. Glaister, 2010. "Factors Determining Offshore Location Choice for R&D Projects: A Comparative Study of Developed and Emerging Regions," Journal of Management Studies, Wiley Blackwell, vol. 47(8), pages 1534-1560, December.
    12. Peter D. Ørberg Jensen & Torben Pedersen, 2011. "The Economic Geography of Offshoring: The Fit between Activities and Local Context," Journal of Management Studies, Wiley Blackwell, vol. 48(2), pages 352-372, March.
    13. Xu, Kai & Hitt, Michael A. & Brock, David & Pisano, Vincenzo & Huang, Lulu S.R., 2021. "Country institutional environments and international strategy: A review and analysis of the research," Journal of International Management, Elsevier, vol. 27(1).
    14. Fagerberg, Jan & Srholec, Martin, 2008. "National innovation systems, capabilities and economic development," Research Policy, Elsevier, vol. 37(9), pages 1417-1435, October.
    15. Arie Y. Lewin & Silvia Massini & Carine Peeters, 2011. "Microfoundations of Internal and External Absorptive Capacity Routines," Organization Science, INFORMS, vol. 22(1), pages 81-98, February.
    16. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    17. Haakonsson, Stine Jessen & Ujjual, Vandana, 2015. "Internationalisation of R&D: New insights into multinational enterprises’ R&D strategies in emerging markets," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 26(2), pages 101-122.
    18. repec:bla:jomstd:v:47:y:2010:i:s2:p:1534-1560 is not listed on IDEAS
    19. Marcelo Cano-Kollmann & John Cantwell & Thomas J Hannigan & Ram Mudambi & Jaeyong Song, 2016. "Knowledge connectivity: An agenda for innovation research in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(3), pages 255-262, April.
    20. Gary Gereffi, 2020. "What does the COVID-19 pandemic teach us about global value chains? The case of medical supplies," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 287-301, September.
    21. Anthony Goerzen & Christian Geisler Asmussen & Bo Bernhard Nielsen, 2013. "Global cities and multinational enterprise location strategy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(5), pages 427-450, June.
    22. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
    23. Kuemmerle, Walter, 1999. "Foreign direct investment in industrial research in the pharmaceutical and electronics industries--results from a survey of multinational firms," Research Policy, Elsevier, vol. 28(2-3), pages 179-193, March.
    24. Sjoerd Beugelsdijk & Ram Mudambi, 2013. "MNEs as border-crossing multi-location enterprises: The role of discontinuities in geographic space," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(5), pages 413-426, June.
    25. Haakonsson, Stine Jessen & Ujjual, Vandana, 2015. "Internationalisation of R&D: New insights into multinational enterprises’ R&D strategies in emerging markets," management revue. Socio-economic Studies, Rainer Hampp Verlag, vol. 26(2), pages 101-122.
    26. Gerry Johnson & Leif Melin & Richard Whittington, 2003. "Micro Strategy and Strategizing: Towards an Activity‐Based View," Journal of Management Studies, Wiley Blackwell, vol. 40(1), pages 3-22, January.
    27. Seamus Grimes & Marcela Miozzo, 2015. "Big Pharma's Internationalization of R&D to China," European Planning Studies, Taylor & Francis Journals, vol. 23(9), pages 1873-1894, September.
    28. Amelia U. Santos-Paulino & Mariagrazia Squicciarini & Peilei Fan, 2014. "Foreign Direct Investment, R&D Mobility and the New Economic Geography: A Survey," The World Economy, Wiley Blackwell, vol. 37(12), pages 1692-1715, December.
    29. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
    30. Yves Croissant, 2020. "mlogit: Random Utility Models in R," Post-Print hal-03019603, HAL.
    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. David Schulzmann & Evis Sinani & Bersant Hobdari & Bent Petersen, . "Drivers of R&D greenfield investment projects in the communications, software and IT service industries in developing countries," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.

    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. Ana Botella Andreu & Katiuscia Lavoratori, 2022. "History Matters: Colonial-Based Connectivity and Foreign Headquarter Location Choice," Management International Review, Springer, vol. 62(5), pages 711-739, October.
    2. Fiona Kun Yao & Luqun Xie & Jiatao Li & Mingrui Xu, 2023. "Subnational-level government influence and FDI location choices: The moderating roles of resource dependence relations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(6), pages 1027-1054, August.
    3. 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).
    4. David Schulzmann & Evis Sinani & Bersant Hobdari & Bent Petersen, . "Drivers of R&D greenfield investment projects in the communications, software and IT service industries in developing countries," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    5. Davide Castellani & Katiuscia Lavoratori, 2020. "The lab and the plant: Offshore R&D and co-location with production activities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(1), pages 121-137, February.
    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. Luigi Benfratello & Davide Castellani & Anna D'Ambrosio, 2024. "Migration and the location of MNE activities: Evidence from Italian provinces," Journal of Regional Science, Wiley Blackwell, vol. 64(2), pages 428-461, March.
    8. Dodourova, Mariana & Zhao, Shasha & Harzing, Anne-Wil, 2023. "Ambidexterity in MNC knowledge sourcing in emerging economies : A microfoundational perspective," Other publications TiSEM b61c5495-162a-4686-9614-0, Tilburg University, School of Economics and Management.
    9. Dodourova, Mariana & Zhao, Shasha & Harzing, Anne-Wil, 2023. "Ambidexterity in MNC knowledge sourcing in emerging economies: A microfoundational perspective," International Business Review, Elsevier, vol. 32(2).
    10. Haoge Chang & Yusuke Narita & Kota Saito, 2022. "Approximating Choice Data by Discrete Choice Models," Papers 2205.01882, arXiv.org, revised Dec 2023.
    11. Niccolò Pisani & Ans Kolk & Václav Ocelík & Ganling Wu, 2019. "Does it pay for cities to be green? An investigation of FDI inflows and environmental sustainability," Journal of International Business Policy, Palgrave Macmillan, vol. 2(1), pages 62-85, March.
    12. Mark Lorenzen & Ram Mudambi & Andreas Schotter, 0. "International connectedness and local disconnectedness: MNE strategy, city-regions and disruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-24.
    13. Jing Li & Klaus E Meyer & Hua Zhang & Yuan Ding, 2018. "Diplomatic and corporate networks: Bridges to foreign locations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(6), pages 659-683, August.
    14. Bas Karreman & Martijn J. Burger & Frank G. van Oort, 2017. "Location Choices of Chinese Multinationals in Europe: The Role of Overseas Communities," Economic Geography, Taylor & Francis Journals, vol. 93(2), pages 131-161, March.
    15. Asimakopoulos, Grigorios & Revilla, Antonio & Rodríguez, Alicia, 2023. "International R&D sourcing, innovation and firm age: The advantage of ‘born-international sourcers’," Technovation, Elsevier, vol. 122(C).
    16. Mashiho Mihalache & Oli Mihalache & Jan Ende, 2021. "International Diversification and MNE Innovativeness: A Contingency Perspective of Foreign Subsidiary Portfolio Characteristics," Management International Review, Springer, vol. 61(6), pages 769-798, December.
    17. Benfratello, Luigi & D’Ambrosio, Anna & Sangrigoli, Alida, 2023. "Foreign Direct Investments in Africa: Are Chinese investors different?," Journal of Business Research, Elsevier, vol. 155(PA).
    18. Thakur-Wernz, Pooja & Cantwell, John & Samant, Shantala, 2019. "Impact of international entry choices on the nature and type of innovation: Evidence from emerging economy firms from the Indian bio-pharmaceutical industry," International Business Review, Elsevier, vol. 28(6), pages 1-1.
    19. João Albino-Pimentel & Jennifer Oetzel & Chang Hoon Oh & Nicholas A. Poggioli, 2021. "Positive institutional changes through peace: The relative effects of peace agreements and non-market capabilities on FDI," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(7), pages 1256-1278, September.
    20. Christine Côté & Saul Estrin & Daniel Shapiro, 0. "Expanding the international trade and investment policy agenda: The role of cities and services," Journal of International Business Policy, Palgrave Macmillan, vol. 0, pages 1-25.

    More about this item

    Statistics

    Access and download statistics

    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:unc:tncjou:66. 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: Kumi Endo (email available below). General contact details of provider: https://edirc.repec.org/data/unctach.html .

    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.