Walter Kuemmerle

Foreign direct investment in industrial research in the pharmaceutical and electronics industries--results from a survey of multinational firms

Abstract This paper examines motives, location characteristics, inter-temporal characteristics and modes of entry for foreign direct investment (FDI) in research and development (R&D). The paper is based on a detailed empirical survey of laboratory sites established by 32 large multinational companies domiciled in 5 countries. Findings indicate that FDI in R&D has risen considerably over the last 40 years and that firms invest in R&D sites abroad in order to augment their knowledge base or in order to exploit it. The former motive leads to establishment of facilities primarily close to universities while the latter type leads to establishment of facilities close to existing manufacturing facilities and markets. The paper also finds that greenfield investments are the dominant mode of entry and that firms establish multiple R&D sites in their home countries before investing in such sites abroad.

Optimal scale for research and development in foreign environments—an investigation into size and performance of research and development laboratories abroad

Abstract This paper examines the relationship between performance and size of R&D laboratories operated abroad. Based on a theoretical argument, the paper proposes a concave relationship between laboratory size and performance, as well as a linear relationship between firm learning and laboratory performance. Empirical tests with 129 laboratories established by 27 multinational companies in the pharmaceuticals and electronics industries support these conjectures.

Foreign direct investment in industrial research in the pharmaceutical and electronics industries: results from a survey of multinational firms

Summary form only given. This paper examines motives, location characteristics, inter-temporal characteristics and modes of entry for foreign direct investment (FDI) in research and development (R&D). The paper is based on a detailed empirical survey of laboratory sites established by 32 large multinational companies. The sample consists of 10 US firms, 12 Japanese firms and 10 European firms. 19 out of the 32 firms are Fortune Global 100 firms and thus among the largest in their industry. The empirical survey consisted of extensive archival research, a questionnaire survey and at least 2 interviews with senior executives in each company. Through this approach it was possible to establish a detailed history for each of 238 R&D sites established by these 32 firms. The data set on which the paper is based is one of the largest of its kind. The paper uses tabulation devices as well as statistical tests to describe and evaluate various aspects of FDI in R&D. Findings are compared to results obtained by other researchers and differences and similarities are discussed. The paper finds that FDI in R&D has risen considerably over the last 40 years and that firms invest primarily in industrialized countries. We also find that firms invest in R&D sites abroad for two reasons, either in order to acquire new knowledge and augment the firms home base or in order to apply existing knowledge to local markets and manufacturing facilities and thus to exploit the firms knowledge base.

Global R&D Strategies of Downstream Firms and the Role of Suppliers

Globalization generally refers to an evolving pattern of cross-border activities that industrial firms undertake. The basic idea of globalization is that firms compete more efficiently via a worldwide network of subsidiaries and arm’s-length contractual relationships; this cross-border network enables a firm’s managers to access relevant information quickly and to reach important decisions without delay. A well-functioning cross-border network of formal and informal relationships is the primary feature distinguishing a globalized firm from other firms.