Internationalization Of R&D Activities: The Case Of Swiss MNEs

Abstract

The roles of foreign research and development (R&D) activities, as well as the consequences of the internationalization of R&D for the domestic firms' specific advantages and the home country's specific advantages, are developed in this paper. Although it is now widely acknowledged that technological activities are becoming more internationally dispersed, theories on the implications of foreign R&D activities on home economies are still scarce. This research brings useful theoretical contributions and evidence to fill this gap. The hypotheses on the motivations for foreign R&D are also tested through an empirical investigation. The data includes 39,281 patents published by Swiss multinational enterprises (MNEs) at the European Patent Office (EPO) from December 1978 to September 2006 and 6,620 patent citations. The patent analysis is complemented by a survey involving 35 major Swiss MNEs. The results show that MNEs perform an increasing share of their R&D activities abroad, concentrated in a few developed countries. Further, MNEs invest and will continue to invest strongly in China and in Asian countries, as well as in developing countries. Supporting local customers and local market is the prevalent type of foreign R&D. Yet, the access to foreign science and technology is becoming increasingly important in all host regions. Knowledge flows within the organization of the firm, suggesting that R&D centres are interconnected. Moreover, domestic firms become more competitive through their access to the host country's specific advantages and spend more resources, especially in the country of origin, the basis of their first competitive advantage.