Strategic R&D Location by Multi-National Firms: Spillovers, Technology Sourcing and Competition

41 Pages Posted: 3 Aug 2005

See all articles by René Belderbos

René Belderbos

University of Leuven (KUL) - Department of Managerial Economics, Strategy and Innovation; Maastricht University - Department of Organization & Strategy

Elissavet Lykogianni

Catholic University of Leuven (KUL) - Department of Economics

Reinhilde Veugelers

Catholic University of Leuven (KUL) - Department of Applied Economics; Centre for Economic Policy Research (CEPR)

Date Written: May 2005

Abstract

We analyze strategic interaction in R&D internationalization decisions by two multi-national 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

JEL Classification: D21, F23, L16

Suggested Citation

Belderbos, Rene and Lykogianni, Elissavet and Veugelers, Reinhilde, Strategic R&D Location by Multi-National Firms: Spillovers, Technology Sourcing and Competition (May 2005). CEPR Discussion Paper No. 5060. Available at SSRN: https://ssrn.com/abstract=775865

Rene Belderbos

University of Leuven (KUL) - Department of Managerial Economics, Strategy and Innovation ( email )

Naamsestraat 69
Leuven, B-3000
Belgium
+32 16 32 6912 (Phone)
+32 16 32 6732 (Fax)

Maastricht University - Department of Organization & Strategy ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Elissavet Lykogianni

Catholic University of Leuven (KUL) - Department of Economics ( email )

Leuven, B-3000
Belgium

Reinhilde Veugelers (Contact Author)

Catholic University of Leuven (KUL) - Department of Applied Economics ( email )

Leuven, B-3000
Belgium
+32 16 32 6908 (Phone)
+32 16 32 6732 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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