Foreign vs. domestic multinationals in R&D linkage strategies

This paper examines how foreign multinationals (FMN) and domestic multinationals (DMN) differ in R&D outsourcing and cooperation. We argue that the propensity of DMN and FMN to create such R&D linkages reflects their specific balance between advantages and challenges of multinationality. On the one hand, both FMN and DMN rely on a combination of home-base advantages and learning capacities, which positively affect their R&D linkages with national and international counterparts. On the other hand, the costs and risks associated with unfamiliar contexts reduce the propensity of FMN to create R&D linkages with local counterparts; while they will not penalise DMN, which do not suffer any liability of foreignness when dealing with local counterparts in their country of origin. This interpretive framework is tested using data on R&D investors active in Italy over 2003-2010, controlling for firms' internal R&D efforts, internationalisation, age and regional distribution of R&D.