Does Excellence in Academic Research Attract Foreign R&D?
René Belderbos, Bart Leten & Shinya Suzuki
#2009-066
We examine the role of host countries’ academic research strengths in
global R&D location decisions by multinational firms. While we expect
that a firm’s propensity to perform R&D in a host country increases with
the strength of local academic research, firms are expected to be
heterogeneously positioned to benefit from academic research strengths
due to differences in the capacity to absorb and utilize scientific
knowledge. We find support for these conjectures in an analysis of
foreign R&D activities in 40 host countries and 30 technology fields by
176 leading European, US and Japanese firms during the periods 1995-1998
and 1999-2002. Controlling for a wide range of host country factors, the
number of relevant ISI publications by scientists based in the host
country has a substantial positive impact on the propensity to conduct
foreign R&D. The effect of academic research is significantly larger for
firms with a stronger science orientation in R&D - as indicated by
citations to scientific literature in prior patents. For host countries
with a strong relevant science base, this greater responsiveness of
science oriented firms more than offsets a generally greater inclination
to concentrate R&D at home. The findings appear robust across a variety
of specifications.
UNU-MERIT Working Papers
ISSN 1871-9872