R&D intensity for innovative and adaptive purposes in overseas subsidiaries: Evidence from Japanese multinational enterprises |
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Authors: | Yasuyuki Todo Satoshi Shimizutani |
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Institution: | a Graduate School of Frontier Sciences, University of Tokyo, 5-1-5 Kashiwanoha, Kashiwa, Chiba 277-8563, Japan b Institute for International Policy Studies, 3-2-2 Toranomon, Minato-ku, Tokyo 105-0001, Japan c Research Institute of Economy, Trade and Industry, Japan |
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Abstract: | This paper investigates the causes of R&D activities of overseas subsidiaries using firm-level panel data for Japanese multinationals. We distinguish between overseas innovative R&D (basic and applied research) and adaptive R&D (development and design) and examine how the intensity of each type of R&D is determined, using Amemiya Generalized Least Squares estimation. Our findings suggest that overseas innovative R&D aims at the exploitation of foreign knowledge, whereas adaptive R&D has no such aim. In addition, the size of the host country’s market positively affects both types, whereas geographic distance between the host and the home country has a negative impact. Finally, the parent firm’s knowledge is found to increase the size of overseas adaptive R&D but not innovative R&D. Based on a theoretical model, we interpret this evidence as showing that knowledge of the parent firm is not fully utilized in innovative R&D of its subsidiary. |
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Keywords: | F23 O30 |
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