Abstract
We investigate the impact of outward Foreign Direct Investments (FDI) on the Multinational Corporations technological leadership, meant as the capacity of entering and remaining among the top Research & Development (R&D) world investors. The research hypotheses are formulated by distinguishing FDI in R&D from FDI in other economic activities. The findings support our hypotheses with respect to the top R&D circles of the European Industrial Research and Innovation Scoreboard. Increasing the number of FDI projects in R&D makes the entrance in these circles more probable. The same holds true for non-R&D FDI, but with a lower impact. The number of R&D-FDI also reduces the probability of exiting from the circles, while that of non-R&D ones does not. These results are robust when the value of FDI projects in R&D is considered, apart from their impact on the exit from the circles, which appears to vanish. Although with caveats, the policy support to R&D internationalization provides companies with a sustainable competitive advantage in the race for the most substantial R&D investments and for the entailed economic and financial benefits.
Highlights
In the current global scenario, populated by Multinational Corporations (MNCs) operating in an array of markets and technologies, innovation performances depend and above all on the capacity of sourcing knowledge internationally and of exploiting it in production activities on a worldwide basis
We investigate the impact of outward Foreign Direct Investments (FDI) on the Multinational Corporations technological leadership, meant as the capacity of entering and remaining among the top Research & Development (R&D) world investors
Innovation competition entails struggling for the leadership in large R&D investments on a worldwide scale
Summary
In the current global scenario, populated by Multinational Corporations (MNCs) operating in an array of markets and technologies, innovation performances depend and above all on the capacity of sourcing knowledge internationally and of exploiting it in production activities on a worldwide basis. Foreign Direct Investments (FDI), mainly but in Research & Development (R&D), are crucial in this last respect They allow firms to expand their markets, enter into global value chains, interact with foreign business players and labs, get embeddeded in the scientific communities of the host country, and tap into its set of knowledge and competencies (Maskell et al 2007). Within this realm, the original focus of the paper resides in the effects that FDI have on the firm’s capacity of outperforming its rivals in terms of R&D investments.
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