'Location versus home country advantages' in R&D activities: some further results on multinationals' locational strategies

Abstract In this paper we study the question of the determinants of the foreign location of technological activities of multinational firms (MNFs): do they locate their knowledge activities as a consequence of their home country advantages or according to host country strengths? We have defined four types of strategy (learning) according to revealed technological advantages. Our results, based on the 345 MNFs with the greatest patenting activity in Europe, globally confirm the main findings of Patel and Vega [Research Policy 28 (2/3) (1999) 145–155]: in a great majority of cases (nearly 70%) MNFs locate their activities abroad in technological areas or fields where they are strong at home (strategies 2 and 3). Moreover, strategy 3, which corresponds with “dynamic learning”, outclasses strategy 2, which corresponds with “myopic learning”, and becomes increasingly important over time. The strategy of Japanese firms is very different from European and US MNFs: in Europe, Japanese firms seek out locations that have complementary strengths to their own (strategy 2). In terms of policy implications it can be noted that the national system of innovation (in particular the system of academic research) should strengthen the technological advantages of local firms and enable them to successfully locate a part of their R&D activities abroad.

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