Brexit! The Effect of Political Risk on International Research Collaborations of Firms and Research Institutions

36 Pages Posted: 2 Dec 2020

See all articles by Benjamin Osswald

Benjamin Osswald

University of Illinois at Urbana-Champaign - Department of Accountancy

Jochen Pierk

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: October 2, 2020

Abstract

This paper examines how political risk affects the number of international research collaborations of firms and research institutions (e.g., universities). We exploit the uncertainty surrounding the withdrawal of the United Kingdom (UK) from the European Union (EU), commonly referred to as Brexit. Specifically, we focus on the period after the UK declared the withdrawal but while the UK was still a full member of the EU. Our difference-in-differences analyses show that UK firms drastically decrease their international research collaborations by about 50 percent while other European firms increased international partnerships during the same time. In contrast, we do not find a similar decrease for UK research institutions. These findings illustrate that firms’ international research collaborations are substantially affected by macro risk factors.

Keywords: Brexit, political risk, collaborations, science

JEL Classification: G38, G18, F16, E60

Suggested Citation

Osswald, Benjamin and Pierk, Jochen, Brexit! The Effect of Political Risk on International Research Collaborations of Firms and Research Institutions (October 2, 2020). Available at SSRN: https://ssrn.com/abstract=3703590

Benjamin Osswald

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Jochen Pierk (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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