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 language | English (US) |
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Pages (from-to) | 121-140 |
Number of pages | 20 |
Journal | Strategic Management Journal |
Volume | 26 |
Issue number | 2 |
DOIs | |
State | Published - Feb 2005 |
Keywords
- Absorptive capacity
- Foreign direct investment
- International R&D
- Patents; pharmaceutical research