Abstract
This paper examines the determinants of foreign direct investment (FDI) in research and development laboratories by 32 multinational enterprises in the pharmaceutical and electronics industries. The paper applies a dichotomous set of motives for FDI. Results from an econometric analysis of 136 laboratory investments show that relative market size and relative strength of a country's science base determine whether FDI in research and development is carried out in order to exploit existing firm-specific advantages, or in order to build up new firm-specific advantages. This holds true in similar form for Japanese, European and U.S. firms and across the two industries.
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*Walter Kuemmerle is Assistant Professor of Business Administration and Class of 1961 Fellow at Harvard University, Graduate School of Business Administration. His research focuses on the management of knowledge flows and capital flows across country borders. His current research topics include foreign direct investment in research and development, the evolution of multinational firms and the globalization of the private equity industry.
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Kuemmerle, W. The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation. J Int Bus Stud 30, 1–24 (1999). https://doi.org/10.1057/palgrave.jibs.8490058
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DOI: https://doi.org/10.1057/palgrave.jibs.8490058