Overseas R&D Activities by Japanese Multinational Enterprises: Causes, Impacts and Interaction with Parent Firms

This paper investigates determinants and impacts of R&D activities in overseas subsidiaries, using .rm-level panel data for Japanese multinational enterprises. We distinguish between overseas innovative and adaptive R&D according to survey responses and .nd substantial di.erences between the two types of R&D. Most importantly, evidence suggests that overseas innovative R&D targets the exploitation of foreign advanced knowledge, successfully takes it to parent .rms, and raises home productivity. By contrast, the primary role of overseas adaptive R&D is to contribute to productivity in the host country with the use of knowledge of parent .rms. In addition, we .nd no complementarity between home and overseas innovative R&D, i.e., no evidence that overseas innovative R&D raises the marginal e.ect of home R&D on home productivity.