How Do Different Motives for R&D Investment in Foreign Locations Affect Domestic Firm Performance? An Analysis Based on Swiss Panel Micro Data

KOF Swiss Economic Institute Working Paper No. 258

41 Pages Posted: 14 Jun 2010

See all articles by Spyros Arvanitis

Spyros Arvanitis

Swiss Federal Institute of Technology Zurich (ETH) - Swiss Institute for Business Cycle Research (KOF)

Heinz Hollenstein

Austrian Institute of Economic Research (WIFO)

Date Written: May 1, 2010

Abstract

The aim of this article is to investigate the differences between specific motives of R&D investment in foreign locations with respect to the factors influencing the likelihood of foreign R&D and to the impact of foreign presence on the parent firms’ innovativeness and productivity. An econometric analysis of Swiss firm panel data shows, firstly, that factors related to firm-specific knowledge-oriented advantages are more important for explaining the likelihood of foreign R&D activities than factors reflecting disadvantages related to home location. Secondly, knowledge-oriented motives of foreign R&D are positively correlated to innovation performance of domestic firms, whereas market-oriented and resource-oriented strategies correlate positively with productivity.

Keywords: Research And Development (R&D), Foreign R&D, Motives Of Foreign R&D, Home Effects Of Foreign R&D, Firm Performance

JEL Classification: O31, F23

Suggested Citation

Arvanitis, Spyros and Hollenstein, Heinz, How Do Different Motives for R&D Investment in Foreign Locations Affect Domestic Firm Performance? An Analysis Based on Swiss Panel Micro Data (May 1, 2010). KOF Swiss Economic Institute Working Paper No. 258, Available at SSRN: https://ssrn.com/abstract=1624851 or http://dx.doi.org/10.2139/ssrn.1624851

Spyros Arvanitis (Contact Author)

Swiss Federal Institute of Technology Zurich (ETH) - Swiss Institute for Business Cycle Research (KOF) ( email )

CH-8092 Zurich
Switzerland
+41 44 632 51 68 (Phone)
+41 44 632 13 52 (Fax)

Heinz Hollenstein

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

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