Attraction and deterrence in the location of foreign-owned R&D activities: the role of positive and negative spillovers
by John Cantwell, Lucia Piscitello
International Journal of Technological Learning, Innovation and Development (IJTLID), Vol. 1, No. 1, 2007

Abstract: This paper examines how the characteristics of local contexts affect the location of foreign-owned R&D activities, in terms of positive (i.e. attraction) and/or negative (i.e. deterrence) spillovers. It distinguishes between activities that are Competence-Creating (CC) (that create new lines of technology for the MNC group) and Competence-Exploiting (CE) (adapt established lines of technology). The empirical investigation uses patents granted in the USA to the world's largest industrial firms for inventions achieved in their European-located operations, classified by the host region in which the research facility responsible is located, over the period 1969–1995. The results show that positive spillovers stem from a high degree of local interindustry diversity, as well as from the presence of a local variety of other actors in the same industry, at least when they are foreign-owned. In contrast, the presence of domestically-owned dominant firms in the same industry tends to act as a deterrent.

Online publication date: Tue, 04-Sep-2007

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