Strategic R&D Location by Multinational Firms: Spillovers, Technology Sourcing, and Competition

Rene Belderbos, Elissavet Lykogianni and Veugelers Reinhilde ()

Journal of Economics & Management Strategy, 2008, vol. 17, issue 3, pages 759-779

Abstract: "This paper develops a model of strategic interaction in R&D internationalization decisions between two multinational firms, competing both abroad and in their home markets. It examines different incentives for foreign R&D faced by a technology leader and a technology laggard. The model takes into account the impact of local inter firm R&D spillovers, (noncostless) international intra firm transfer of knowledge, and the notion that internal R&D increases the effectiveness of incoming spillovers. Analytical results suggest that greater efficiency of intra firm transfers and greater R&D spillovers increase the attractiveness of domestic R&D for the technology leader if the technology gap with the laggard is large. The lagging firm, in contrast, increases the share of foreign R&D as foreign technology sourcing becomes more effective. Competition encourages the leading firm to engage in foreign R&D to capture a larger share of profits on the foreign market, whereas the laggard concentrates more R&D at home to defend its home market position." Copyright (c) 2008, The Author(s) Journal Compilation (c) 2008 Wiley Periodicals, Inc..

Date: 2008
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Working Paper: Strategic R&D Location by Multinational Firms: Spillovers, Technology Sourcing and Competition (2005)
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