Techno-Nationalalism and Skilled Job Creations: The Role of Foreign Diplomacy in MNES’ Global R&D Projects

In light of resurgent techno-nationalism linking technological capabilities to a country’s national security and economic prosperity, MNEs (Multinational Enterprises) expanding their international R&D activities are increasingly facing challenges and scrutiny in host-countries. This study explores how MNEs serve the national interest of host countries in response to techno-nationalism. Drawing from legitimacy theory, we theorize and examine the relationship between diplomatic relations (between home and host countries) and skilled job creation (in host countries) by MNEs’ international R&D investments. We argue that MNEs internationalizing their R&D in countries with weaker diplomatic relations will create more skilled jobs to mitigate legitimacy threats in host countries. Further, we explore several industry and institution-specific boundary conditions that change the core relationship. Employing a unique data set of R&D investment projects for the period 2003- 2019, we find support for our hypotheses. We contribute to the understanding of how knowledge-intensive MNEs respond to techno-nationalism and manage their legitimacy in host-countries.