Localization and Overseas R&D Activity: The Case of Taiwanese Multinational Enterprises in China

Published on Mar 1, 2015in R & D Management2.35
· DOI :10.1111/radm.12059
Chih-Hai Yang2
Estimated H-index: 2
(NCU: National Central University),
Kazunobu Hayakawa11
Estimated H-index: 11
(Japan External Trade Organization)
This study investigates the determinants of overseas research and development (R&D) and the influences of various aspects of localization on affiliates' R&D intensity. Using a dataset of Taiwanese multinational enterprises (MNEs) in China, the empirical estimations find that MNEs with a larger firm size, more R&D expenditure, and a higher outward foreign direct investments intensity tend to undertake R&D. Host regions' characteristics, particularly market size and R&D resources, do matter for attracting MNEs to conduct R&D locally. Crucially, affiliates' R&D intensity is related to the degree of localization. The degree of market localization and localization of the R&D network has a positive association with affiliates' R&D intensity. From the perspective of R&D policy, a country with healthy R&D infrastructures helps attract the establishment of R&D labs of MNEs.
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