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

Reinhilde Veugelers, Rene Belderbos and Elissavet Lykogianni

No 5060, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyse strategic interaction in R&D internationalization decisions by two multinational firms competing both abroad and in their home markets and examine different incentives for foreign R&D faced by technology leaders and technology laggards. The model takes into account the impact of local inter-firm R&D spillovers, (non-costless) international intra-firm transfer of knowledge, and the notion that internal R&D increases the effectiveness of incoming spillovers. Greater efficiency of intra-firm transfers and greater spillovers increases the attractiveness of home R&D to the technology leader. The lagging firm in contrast increases the share of foreign R&D as overseas technology sourcing becomes more effective. Greater product market competition encourages the leading firm to engage in foreign R&D to capture a larger share of profits on the foreign market, while laggards concentrate more R&D at home to defend their home market position. The country with a stricter intellectual property rights regime attracts a larger share of R&D by both leader and laggard.

Keywords: Mnes; R&d; R&d spillovers (search for similar items in EconPapers)
JEL-codes: D21 F23 L16 (search for similar items in EconPapers)
Date: 2005-05
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (11)

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Journal Article: Strategic R&D Location by Multinational Firms: Spillovers, Technology Sourcing, and Competition (2008)
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