The returns to foreign R&D

Extant research on R&D internationalization has not examined how effective foreign R&D investments are in generating positive returns for the investing firms, in particular in comparison and conjunction with the effects of domestic R&D investments. We examine the effectiveness of international knowledge sourcing through foreign R&D in an empirical analysis of the productivity effects of foreign and domestic R&D investments in a large panel of firms based in the Netherlands. We argue that foreign and domestic R&D will exhibit complementarity in their effects on productivity, but that the roles of domestic and foreign R&D depend on the relative position of the home country with respect to the global technology frontier and the related relative opportunities for knowledge sourcing abroad. We estimate a dynamic panel data model derived from a knowledge stock augmented production function framework allowing for productivity convergence and declining returns to R&D. We confirm that for firms active in industries in which the home country is behind the global technology frontier, foreign R&D provides positive returns and has a complementary relationship with domestic R&D. For industries at the global technology frontier, in contrast, domestic R&D is the primary source of productivity growth

Heterogeneity in R&D Cooperation Strategies

We explore heterogeneities in the determinants of innovating firms' decisions to engage in r&d cooperation, differentiating between four types of cooperation partners: competitors, suppliers, customers, and universities and research institutes (institutional cooperation). We use two matched waves of the dutch community innovation survey (in 1996 and 1998) and apply system probit estimation. We find that determinants of r&d cooperation differ significantly across cooperation types. The positive impact of firm size, r&d intensity, and incoming source-specific spillovers is weaker for competitor cooperation, reflecting greater appropriability concerns. Institutional spillovers are more generic in nature and positively impact all cooperation types. The results appear robust to potential simultaneity bias