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Do Overseas R&D Laboratories in Emerging Markets Contribute to Home Knowledge Creation?

An Extension of the Double Diamond Model

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Abstract

  • The double diamond model contends that both home and host locations affect MNE’s international competitiveness. Drawing on the view that multinationals act as a link between home and host, we extend this framework and investigate theindirect impact of host on home location with reference to R&D internationalisation in emerging economies.

  • By resorting to a sample of 221 large OECD regions from which R&D investments departed to the top six host emerging economies, we evaluate the contribution of different OECD R&D laboratories to the home knowledge creation of the OECD investing region.

  • We test the complementarity between domestic R&D and different value-added R&D activities carried out by different technology-intensive R&D laboratories in terms of home knowledge creation of OECD investing regions.

  • Our findings suggest that the activity of R&D laboratories focusing onadaptation complements domestic R&D in terms of knowledge creation regardless of the technological intensity of their operations, while the activity of medium technology-intensive R&D laboratories focusing ondevelopment is complementary to domestic R&D.

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Notes

  1. Figure 1 also reports theindirect effects of home on host LAs, which we will not discuss as the literature on inward FDI and spillovers has investigated them extensively (Smarzynka Javorcik2004).

  2. The 21 OECD countries are: Australia, Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Hungary, Ireland, Italy, South Korea, Luxemburg, the Netherlands, Norway, Slovak Republic, Spain, Sweden, the United Kingdom, and the United States. Due to missing data, we excluded 9 regions (2 Canadian regions, 2 Spanish autonomous regions and the Canary Islands, 2 Italian autonomous provinces, and Alaska and Hawaii in the US).

  3. For the majority of the European Union countries, the Territorial Levels are equivalent to the Nomenclature of Territorial Units for Statistics developed by Eurostat (see Maraut et al.2008).

  4. Information availability prevented us from adopting a finer classification of R&D laboratories (e.g., Pearce and Papanastassiou1999).

  5. When multiple inventors participate to the patent, the patent is equally shared among them. None of the sample regions records zero patents.

  6. An alternative measure of economic size could be GDP. However, GDP is highly correlated with population size in logarithm.

  7. SuchN × N matrix (whereN is the number of regions) takes value 1 when the pair of regions share a border or are separated by few kilometres of sea- or lake-water (e.g., the US and the Canadian states along the Great Lakes area), 0 otherwise.

  8. An alternative solution to collinearity would be to drop the constant. However, thespatreg STATA command used does not allow this option. Consequently, our complementarity test is performed on three categories (Homehost kz , Onlyhost kz andOnlyhome kz ) according to the following rule:

    $${{\theta }_{{1}{1}}}-{{\theta }_{{1}{0}}}\ge {{\theta }_{{0}{1}}}$$
    (3)

    . WhenNohomehost kz is used as the benchmark against the three other dummies,\({{\theta }_{00}}=0.\) Accordingly, the inequality tests involving four (Eq.  (2)) or three categories (Eq. (3)), respectively, are equivalent.

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  1. Facoltà di Scienze Politiche, University of Catania, Catania, Italy

    Lorena M. D’Agostino &  Grazia D. Santangelo

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  1. Lorena M. D’Agostino
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D’Agostino, L., Santangelo, G. Do Overseas R&D Laboratories in Emerging Markets Contribute to Home Knowledge Creation?. Manag Int Rev 52, 251–273 (2012). https://doi.org/10.1007/s11575-012-0135-2

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