The Gravity of Cross-border R&D Expenditure

Arbeitspapier

While up to the 1990s, R&D was still 'an important case of non-globalization' (Patel and Pavitt 1991), the internationalization of business R&D activities has accelerated significantly during the past two decades. R&D activities of foreign affiliates have become one of the most dynamic elements of the process of globalization. Until recently, the main recipients of cross-border R&D expenditure were developed countries, though new players have emerged lately, particularly in Asia. Against that backdrop, the paper applies a recently compiled novel data set on R&D expenditure of foreign-owned firms in the manufacturing sectors of a set of OECD countries and identifies specific home- and host-country characteristics that are conducive or obstructive to cross-border R&D expenditure of foreign affiliates. The results point to the pivotal role of market size and of cultural, physical and technological proximity for R&D efforts of foreign-owned firms. Moreover, the analysis demonstrates that sufficient human capital and strong indigenous technological capabilities in the host country tend to be conducive to R&D activities of foreign affiliates. In contrast, a rich human capital base in the home country is obstructive to the process of R&D internationalization. Geographic distance turns out to be a strong deterrent.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: wiiw Working Paper ; No. 91

Classification and Topics

• Classification: Wirtschaft ; Multinational Firms; International Business ; Management of Technological Innovation and R&D
• Subject: internationalization of R&D ; multinational firms ; gravity model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dachs, Bernhard ; Leitner, Sandra M. ; Stehrer, Robert
• Event: Veröffentlichung
• (who): The Vienna Institute for International Economic Studies (wiiw)
• (where): Vienna
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/203956
• Last update: 10.03.2025, 11:42 AM CET