Strategies pursued by Swiss firms in investing in R&D at foreign locations an empirical analysis based on firm-level data

Arbeitspapier

The aim of this paper is twofold: Firstly, we try to identify and characterise different types of strategies firms pursue in performing foreign R&D. Secondly, it is analysed whether the types of R&D strategies we identified in the first part differ in terms of their impact on firm productivity. In order to identify foreign R&D strategies we perform, in a first step, a non-hierarchical cluster analysis of data on the firms' motives for investing abroad in R&D. In a second step, we characterise these clusters by use of a large number of variables that, according to the well-known OLI paradigm, determine a firm's FDI in distribution, manufacturing and R&D. In this way, we can check whether the clusters identified by applying a (purely) statistical classification procedure effectively may be interpreted as types of foreign R&D strategies. We end up with four types of strategies, which significantly differ in terms of characteristics that are important according to the OLI approach. In the second part we estimate a production function where the standard factor inputs are complemented by domestic R&D and strategy-specific foreign R&D. It turns out that only one of the four strategies exerts a positive influence on firm productivity. However, it cannot be excluded that some of the other strategies have, in the longer run, a positive productivity effect as well. The paper also finds that foreign and domestic R&D, on balance, are complements.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: KOF Working Papers ; No. 154

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; Multinational Firms; International Business
• Subject: Internationalisation of R&D ; outward FDI in R&D ; motives for foreign R&D ; types of foreign R&D strategies ; foreign R&D and productivity ; substitution vs. complementarity of foreign and domestic R&D

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hollenstein, Heinz
• Event: Veröffentlichung
• (who): ETH Zurich, KOF Swiss Economic Institute
• (where): Zurich
• (when): 2006

Further information

• DOI: doi:10.3929/ethz-a-005277190
• Handle: http://hdl.handle.net/10419/50898
• Last update: 10.03.2025, 11:42 AM CET