Decision-making in investment in overseas R&D

Abstract

According to the literature, multinational firms are motivated to locate R&D activity overseas for mainly three reasons, namely: to adapt to local markets; access lower cost R&D capacity; or access unique research capability. Ireland at the beginning of the century appeared, from this finding, badly placed to attract R&D in foreign direct investment (FDI), as it had by global comparisons neither a large domestic market, a low cost economy nor a strong R&D profile. In spite of this, Ireland has succeeded in attracting significant investment in R&D projects. The cases of investment in Ireland analysed here reveal that the nature of the decision-making process itself has been a decisive factor in the outcome, and that less quantifiable factors such as cultural closeness, history, and personal relationships have played a stronger role in the outcome than would be expected from the literature.