Does international research and development increase patent output? An analysis of Japanese pharmaceutical firms

Joan Penner-Hahn, J. Myles Shaver

Research output: Contribution to journalArticlepeer-review

246 Scopus citations

Abstract

Internationalizing research and development is often advocated as a strategy for fostering the development of technological capabilities. Although firms conduct international R&D to tap into knowledge bases that reside in foreign countries, we argue that in order to benefit from international R&D investments firms must already possess research capabilities in underlying or complementary technologies. We examine the international R&D expansion activities, research capabilities, and patent output of 65 Japanese pharmaceutical firms from 1980 to 1991. We find that firms benefit from international R&D only when they possess existing research capabilities in the underlying technologies. In addition to refining our understanding of when international R&D enhances firm innovation, our results integrate asset-seeking and asset-based theories of foreign direct investment. Internationalizing R&D to tap into foreign knowledge bases is consistent with asset-seeking theories of foreign direct investment, while the contingent nature by which firms benefit from international R&D is consistent with asset-based theories of foreign direct investment and the notion of absorptive capacity.

Original languageEnglish (US)
Pages (from-to)121-140
Number of pages20
JournalStrategic Management Journal
Volume26
Issue number2
DOIs
StatePublished - Feb 2005

Keywords

  • Absorptive capacity
  • Foreign direct investment
  • International R&D
  • Patents; pharmaceutical research

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