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Determinants of International R&D Activities: Evidence from a Gravity Model

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The Geography of Networks and R&D Collaborations

Part of the book series: Advances in Spatial Science ((ADVSPATIAL))

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Abstract

Firms not only produce or sell their products and services abroad, but increasingly also conduct research and development (R&D) at locations outside their home countries – a phenomenon referred to as the ‘internationalization of business R&D’. This chapter analyses the internationalization of business R&D for OECD countries and identifies specific home and host country characteristics that are conducive or obstructive to R&D expenditure of foreign affiliates. The analysis employs a recently compiled novel data set on R&D expenditure of foreign-owned firms in the manufacturing sectors of a set of OECD countries. The results point to the pivotal role of market size and of cultural, physical and technological proximity for R&D efforts of foreign-owned firms. Moreover, the analysis demonstrates that sufficient human capital and strong indigenous technological capabilities in the host country tend to be conducive to R&D activities of foreign affiliates. In contrast, a rich human capital base in the home country is obstructive to the process of R&D internationalization. Geographic distance turns out to be a strong deterrent.

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Notes

  1. 1.

    The following OECD countries are covered: Austria (AUT), Belgium (BEL), Bulgaria (BUL) Canada (CAN), the Czech Republic (CZE), Denmark (DNK), Estonia (EST), Finland (FIN), France (FRA), Germany (GER), Greece (GRC), Hungary (HUN), Ireland (IRL), Japan (JPN), the Netherlands (NLD), Norway (NOR), Poland (POL), Portugal (PRT), Romania (ROM), Spain (ESP), the Slovak Republic (SVK), Slovenia (SVN), Sweden (SWE), Turkey (TUR), the UK (GBR) and the US (USA).

  2. 2.

    Data was collected as part of the project ‘Internationalisation of business investments in R&D and analysis of their economic impact’ and have been slightly revised and updated for this paper.

  3. 3.

    The European Union is considered as one entity, and intra-EU relationships (for example R&D of German firms in France) are not taken into account.

  4. 4.

    Due to lacking data on outward R&D expenditure for most EU countries, Fig. 10.2 is based on US inward data.

  5. 5.

    This measure corresponds to weighted degree centrality in the social network analysis literature.

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Acknowledgements

The analysis of this paper is based on data collected by the project ‘Internationalisation of business investments in R&D and analysis of their economic impact’, commissioned by the European Commission, DG Research and Innovation (Contract Nr. RTD/DirC/C3/2010/SI2.563818). Special thanks go to Matthieu Delescluse, who supported the project as project officer. Moreover, we acknowledge the support by EUROSTAT in collecting the data. The authors also thank the participants of special session on the internationalisation of business R&D held at the Annual ERSA conference 2012 in Bratislava for their useful comments.

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Authors and Affiliations

  1. Vienna Institute for International Economic Studies, Vienna, Austria

    Sandra Leitner & Robert Stehrer

  2. Innovation Systems Department, AIT Austrian Institute of Technology, Vienna, Austria

    Bernhard M. Dachs

Authors
  1. Sandra Leitner
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  2. Robert Stehrer
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  3. Bernhard M. Dachs
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Corresponding author

Correspondence to Sandra Leitner .

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Editors and Affiliations

  1. Innovation Systems Department, AIT Austrian Institute of Technology, Wien, Austria

    Thomas Scherngell

Appendix

Appendix

Table 10.2 Correlation matrix for host and home country determinants of R&D internationalization
Full size table
Table 10.3 Correlation matrix for host and home country determinants of R&D internationalization – with levels of economic development
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Table 10.4 Descriptive statistics
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Table 10.5 Descriptive statistics – with levels of economic development
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Leitner, S., Stehrer, R., Dachs, B.M. (2013). Determinants of International R&D Activities: Evidence from a Gravity Model. In: Scherngell, T. (eds) The Geography of Networks and R&D Collaborations. Advances in Spatial Science. Springer, Cham. https://doi.org/10.1007/978-3-319-02699-2_10

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