How remote are R&D labs? Distance factors and international innovative activities

Davide Castellani, Alfredo Jimenez and Antonello Zanfei
Additional contact information
Alfredo Jimenez: Department of Business Administration, University of Burgos, Burgos, Spain

Journal of International Business Studies, 2013, vol. 44, issue 7, 649-675

Abstract: This paper shows that value creation by multinational enterprises (MNEs) is the result of activities where geographic distance effects can be overcome. We submit that geographic distance has a relatively low impact on international research and development (R&D) investments, owing to the spiky nature of innovation, and to the unique ability of MNEs to absorb and transfer knowledge on a global scale. On the one hand, MNEs need to set up their labs as close as possible to specialized technology clusters where valuable knowledge is concentrated, largely regardless of distance from their home base. On the other, MNEs have historically developed technical and organizational competencies that enable them to transfer knowledge within their internal networks and across technology clusters at relatively low cost. Using data on R&D and manufacturing investments of 6320 firms in 59 countries, we find that geographic distance has a lower negative impact on the probability of setting up R&D than manufacturing plants. Furthermore, once measures of institutional proximity are accounted for, MNEs are equally likely to set up R&D labs in nearby or in more remote locations. This result is driven by MNEs based in Triad countries, whereas for non-Triad MNEs the effect of geographic distance on cross-border R&D is negative and significant.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (86)

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v44/n7/pdf/jibs201330a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v44/n7/full/jibs201330a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:44:y:2013:i:7:p:649-675

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().