Localization and Overseas R&D Activity: The Case of Taiwanese Multinational Enterprises in China

15 Pages Posted: 13 Feb 2015

See all articles by Chih‐Hai Yang

Chih‐Hai Yang

National Central University - Department of Economics

Kazunobu Hayakawa

Institute of Developing Economies (IDE-JETRO)

Date Written: March 2015

Abstract

This study investigates the determinants of overseas research and development (R&D) and the influences of various aspects of localization on affiliates' R&D intensity. Using a dataset of Taiwanese multinational enterprises (MNEs) in China, the empirical estimations find that MNEs with a larger firm size, more R&D expenditure, and a higher outward foreign direct investments intensity tend to undertake R&D. Host regions' characteristics, particularly market size and R&D resources, do matter for attracting MNEs to conduct R&D locally. Crucially, affiliates' R&D intensity is related to the degree of localization. The degree of market localization and localization of the R&D network has a positive association with affiliates' R&D intensity. From the perspective of R&D policy, a country with healthy R&D infrastructures helps attract the establishment of R&D labs of MNEs.

Suggested Citation

Yang, Chih-Hai and Hayakawa, Kazunobu, Localization and Overseas R&D Activity: The Case of Taiwanese Multinational Enterprises in China (March 2015). R&D Management, Vol. 45, Issue 2, pp. 181-195, 2015, Available at SSRN: https://ssrn.com/abstract=2564842 or http://dx.doi.org/10.1111/radm.12059

Chih-Hai Yang (Contact Author)

National Central University - Department of Economics ( email )

NO.300 Jung-da Rd.
Jung-li City
Taoyuan, 320,R.O.C
Taiwan

Kazunobu Hayakawa

Institute of Developing Economies (IDE-JETRO) ( email )

3-2-2 Wakaba, Mihama-ku
Chiba, 261-8545
Japan

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