Determinants of foreign R&D in Swedish multinationals

Drawing on detailed data on some 150 foreign R&D establishments belonging to Sweden's 20 largest manufacturing enterprises, this paper tests a number of hypotheses as to the determinants of different types of such units. The relative importance of market-oriented R&D, i.e. R&D primarily dedicated to adaptation of products to local market characteristics, was seen to be related to the average age of subsidiaries and to be more common in companies with geographically concentrated manufacturing. The relative size of foreign research was associated with companies' R&D intensity, whereas the relative importance of overseas R&D with primary mission to support local production was strongly related to the number of foreign acquisitions. By dissaggregating foreign R&D by types, it was possible to ascertain the effects of a number of organizational variables. Thus the presence of global product divisions was shown to affect negatively the establishment of ‘production support’ units. The existence of product divisions headquartered abroad — taken as an indication of a ‘geocentric’ type of organization — was strongly related to the occurrence of ‘multi-motive’ R&D units, i.e. overseas laboratories that — similar to home country based R&D — perform a wide range of qualified R&D tasks. For the rather large proportion of foreign R&D undertaken in ‘politically motivated’ units, no statistically significant relationships could be established. Here, further research is needed. References