What Determines Overseas R&D Activities? The Case of Japanese Multinational Firms

         
Author Name SHIMIZUTANI Satoshi  (Faculty Fellow, RIETI) /TODO Yasuyuki  (Aoyama Gakuin University)
Creation Date/NO. March 2007 07-E-010
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Abstract

This paper explores what factors determine the nature, extent, and location of Japanese multinationals' R&D activities abroad. Taking advantage of a rich micro-level dataset from the survey on Japanese overseas subsidiaries, the study distinguishes between two types of overseas R&D: innovative and adaptive. We find several differences between the determinants of overseas innovative and adaptive R&D. These differences confirm the view that overseas innovative R&D aims at the exploitation of foreign advanced knowledge, whereas overseas adaptive R&D is mostly influenced by the market size of the host country. Our results provide a convincing and comprehensive explanation of the geographical distribution of overseas R&D by Japanese MNEs.