Globalization of Innovation: The Moderating Role of Project-Level Investment Strategy and Country Type in Location Choice for R&D-Related FDI

Eliane Choquette, Stine Haakonsson, Peter D. Ørberg Jensen*, Søren Feodor Nielsen

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

The current stage of globalization involves geographically dispersed research and development (R&D) investments that are not confined to advanced economies. These cross-border R&D investments are driven by multinational enterprises’ (MNEs’) strategies for exploring and/or exploiting foreign locations. In this paper, we analyse location choice and the moderating effect of project-level investment strategy (i.e. exploration or exploitation) and type of host economy (i.e. advanced or emerging) on the importance of the innovation framework and local innovation capabilities. Our analysis of 588 R&D-related foreign direct investment (FDI) projects in the pharmaceutical and biotech industries during the 2006–2016 period reveals that whereas a host country’s innovation framework and capability overall do affect the location decision, their ultimate effects are conditional on the combination of project-level investment strategy and type of economy. Our findings have policy implications for FDI policies aiming at enhancing linkages between MNEs and local actors and national science, technology, innovation and educational policies and programmes.
Original languageEnglish
JournalTransnational Corporations
Volume28
Issue number2
Pages (from-to)1-30
Number of pages30
ISSN1014-9562
Publication statusPublished - 2021

Keywords

  • Emerging markets
  • Innovation framework
  • Innovation capabilities
  • Investment strategy
  • R&D internationalization
  • Location choice

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