What determines the location choice of R&D activities by multinational firms?

Abstract

We analyse 446 location decisions of R&D activities by multinational firms incorporated in the European Union over 1999-2006. Our results suggest that on average, the location probability of a representative R&D foreign affiliate increased with agglomeration economies from foreign R&D activities, human capital, proximity to centres of research excellence and the research and innovation capacity of the region. Further, our evidence suggests that in comparison to European multinational firms, the effects of patents intensity and proximity to centres of research excellence were stronger in the case of North American multinational firms. While government R&D expenditure intensity increased the probability of location of R&D activities by European multinational firms in the region, it did not have a significant effect on the probability of location of R&D activities by North American multinational firms.JEL classification: F23; O32; R38

Location decisions of non‐bank financial foreign direct investment: Firm‐level evidence from Europe

“…Of note is the statistically negative effect on statutory corporation tax rate. This finding contrasts with other studies of location choice determinants (Basile et al 2008;Siedschlag et al 2013b) who find an insignificant effect of the corporate tax rate on the location choice of MNEs. However, these studies do not consider FDI determinants of the financial sector.…”

“…The distribution is consistent with many of the related empirical studies (Barrios et al 2012;Siedschlag et al 2013a;2013b;Lawless et al 2015) and shows that OECD countries are the home country for the majority of GUOs. For instance, over 21 per cent of the firms in our sample originate in the United States followed by…”

“…This model has been widely used in the empirical literature to examine the determinants of firms' location decisions (Head, Ries and Swenson 1995;Head and Mayer 2004;Nefussi and Schwellnus 2010;Barrios et al 2012;Siedschlag et al 2013a;2013b;Lawless et al 2015). The firm chooses its location to maximise profits, where Π ijt is the profit of firm i when locating in country j at time t:…”

“…A less developed third strand of the literature draws on more granular regional data to examine the determinants of sector-specific FDI locations decisions (Siedschlag et al 2013a;2013b). Our paper is related to all three strands of literature given that we focus on sector-specific FDI determinants, including corporate taxation.…”

The Characteristics of FDI Activities Located in Different Host Regions — A Study Based on Firm-Level Data

“…Demirbag and Glaister (2010) investigate whether FDI experience, project type (research vs. development) and industry affiliation differ among five target regions characterized by different location characteristics (R&D wages, availability of researchers, etc.). Siedschlag et al (2013) examined the factors that determine the location choice of R&D activities of European multinational firms in the period [1999][2000][2001][2002][2003][2004][2005][2006].…”