The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation

Walter Kuemmerle
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Walter Kuemmerle: Harvard Business School

Journal of International Business Studies, 1999, vol. 30, issue 1, 24 pages

Abstract: This paper examines the determinants of foreign direct investment (FDI) in research and development laboratories by 32 multinational enterprises in the pharmaceutical and electronics industries. The paper applies a dichotomous set of motives for FDI. Results from an econometric analysis of 136 laboratory investments show that relative market size and relative strength of a country's science base determine whether FDI in research and development is carried out in order to exploit existing firm-specific advantages, or in order to build up new firm-specific advantages. This holds true in similar form for Japanese, European and U.S. firms and across the two industries.© 1999 JIBS. Journal of International Business Studies (1999) 30, 1–24

Date: 1999
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