The lab and the plant : offshore R&D and co-location with production activities

The literature has highlighted that the propensity of MNEs to co-locate offshore R&D labs with their production plants can vary substantially according to firm and industry characteristics. In this paper, we apply a novel two-stage estimation procedure that allows us to tease out this heterogenous behaviour and investigate the factors that are associated with a higher propensity to co-locate production and R&D activities abroad. Using data on 1,483 greenfield international investments in R&D activities made by 855 firms in 587 cities worldwide, we uncover that the strength of the colocation effect is indeed highly heterogenous across firms. In particular, it is higher among firms with less international experience and geographical dispersion of international activities, as well as with a lower share of intangible assets. These results are consistent with the idea that co-location is a substitute for firms’ ability to coordinate complex and dispersed organizational structures, and that firms relying relatively less on codified knowledge can use co-location of offshore R&D and production to facilitate knowledge transfer across activities

Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: a review of the literature

Internationalization of R&D and innovation by Multinational Enterprises (MNEs) has undergone a gradual and comprehensive change in perspective over the past 50 years. From sporadic works in the late 1950s and in the 1960s, it became a systematically analysed topic in the 1970s, starting with pioneering reports and “foundation texts”. Our review unfolds the theoretical and empirical evolution of the literature from dyadic interpretations of centralization versus decentralization of R&D by MNEs to more comprehensive frameworks, wherein established MNEs from Advanced Economies still play a pivotal role, but new players and places also emerge in the global generation and diffusion of knowledge. Hence views of R&D internationalization increasingly rely on concepts, ideas and methods from IB and other related disciplines such as industrial organization, international economics and economic geography. Two main findings are highlighted. First, scholarly research pays an increasing attention to the network-like characteristics of international R&D activities. Second, different streams of literature have emphasized the role of location- specific factors in R&D internationalization. The increasing emphasis on these aspects has created new research opportunities in some key areas, including inter alia: cross-border knowledge sourcing strategies, changes in the geography of R&D and innovation, and the international fragmentation of production and R&D activities

Too close for comfort? Micro‐geography of agglomeration economies in the United Kingdom

The issue of whether firm productivity is affected by agglomeration externalities is a longstanding area of research. However, the appropriate geographical level to better detect the effects of agglomeration economies is still unclear, and at which level these externalities work. Using detailed firm‐level longitudinal data of manufacturing firms over the period 2008‐2016 in the United Kingdom, we investigate how the micro‐geography of external agglomeration economies associates with firm productivity, comparing different geographical levels: city‐wide and narrowly defined neighborhoods around a firm. Results from a multilevel (mixed‐effects) model show that urbanization externalities play a role at a higher level of geographical aggregation, such as the city, whereas localization externalities operate at a finer level, within the city and in a closer neighborhood to the firm. Failing to control for more granular level of geography results in confounding the two types of externalities. We also provide novel evidence that these externalities vary across firms (such as age, size and productivity) and location (such as population density) characteristics

The Interplay Between HR Practices and Perceived Behavioural Integrity in Determining Positive Employee Outcomes

Managers’ integrity is increasingly considered a crucial topic in organizational studies, as it has been linked to companies’ profitability and success. Employees’ perceptions of the consistency between leaders’ deeds and their words seem, in fact, to influence their attitudes towards an organization, enhancing their supportive behaviour. This study addresses the issue by examining the role of behavioural integrity in the chain linking human resources (HR) practices to employee attitudes. An important novelty of the study is that it explicitly distinguishes between intended and experienced HR practices in conducting the analysis. The aim of the study is to analyse whether managers’ behavioural integrity moderates the link between intended HR practices (practices as designed by the organization) and experienced HR practices (practices as perceived by the employees). The study also tests whether experienced HR practices mediate the relationship between intended HR practices and positive employee outcomes, such as affective commitment and job satisfaction. The results of this study, conducted with more than 6,000 employees, show that managers’ perceived behavioural integrity plays two major roles: it promotes a positive relationship between intended and experienced HR practices, and boosts employees’ affective commitment and job satisfaction both directly and indirectly. The analysis also reveals an intervening role for experienced HR practices, which mediate the joint impact of intended practices and behavioural integrity on the two employee outcomes