Whither geographic proximity? Bypassing local R&D units in foreign university collaboration

René Belderbos,Stijn Kelchtermans,Bart Leten,Jojo Jacob,Massimo Riccaboni,Marcelina Grabowska

doi:10.1057/s41267-021-00413-6

Abstract

MNCs often engage in international research collaborations with foreign universities through one of their central R&D laboratories (at headquarters or elsewhere) even though they operate a local R&D unit close to that university, and hence forego the benefits of geographic proximity and local collaboration. Drawing on the knowledge-based theory of the firm, we hypothesize that the choice between distant and local collaboration systematically relates to the knowledge capabilities of the firms’ R&D units, the characteristics of the focal knowledge, and local knowledge leakage risks. Analysis of close to 13,000 research collaborations with foreign universities by the world’s major biopharmaceutical firms (1995–2015) confirms that collaboration at distance occurs if this allows the firm to benefit from scale and knowledge diversity advantages, if the central unit has strong basic research capabilities, and if collaboration is in a core research domain of the MNC while rival firms are locally present. Maturity of the focal research domain is associated with local collaboration. Our findings qualify the common arguments in favor of collaboration in proximity and suggest that (distant) central R&D units are important orchestrators of research collaboration with universities around the globe.

Highlights

The literature on the internationalization of R&D in multinational corporations (MNCs) has documented the importance of foreign R&D affiliates for firm innovation, with a more outspoken role in knowledge sourcing and creation (e.g., Song & Shin, 2008; PennerHahn & Shaver, 2005; Lahiri, 2010; Castellani et al, 2013; Belderbos, 2003; Kafouros et al 2012; Manolopoulus et al, 2011; Belderbos et al, 2015)
Collaboration through the central R&D unit is more likely if multiple university partners are involved and if the collaboration focuses on basic research
Despite a greater importance of central laboratories in countries outside the home country of the firms and a general increasing presence of local R&D units, the share of foreign university collaboration through a local unit as an alternative to distant collaboration with a central R&D unit has only declined over the years 1995–2015

Summary

Introduction

The literature on the internationalization of R&D in multinational corporations (MNCs) has documented the importance of foreign R&D affiliates for firm innovation, with a more outspoken role in knowledge sourcing and creation (e.g., Song & Shin, 2008; PennerHahn & Shaver, 2005; Lahiri, 2010; Castellani et al, 2013; Belderbos, 2003; Kafouros et al 2012; Manolopoulus et al, 2011; Belderbos et al, 2015). An important role of foreign R&D units is to tap into local scientific networks in the host regions (Almeida & Phene, 2004; Ghoshal & Bartlett, 1990; Nohria & Ghoshal, 1997; Song & Shin, 2008) This follows from the notions that science is an important input for innovation in firms (Nelson, 1993; Cohen et al, 2002; Mansfield, 1995; Salter & Martin, 2001; McMillan et al, 2000; Bercovitz & Feldman, 2007), and that research collaboration with university scientists can improve firm performance (Belderbos et al, 2004; Cockburn & Henderson, 1998; Furman & MacGarvie, 2009). The presence of R&D subsidiaries in host regions, and their interactions with local actors, does provide firms with access to novel knowledge but it entails a risk that knowledge dissipates to other actors in the region, including rival firms (Alcacer & Chung, 2007; Alcacer & Zhao, 2012; Belderbos et al, 2008)

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