We examine the impact of the strength of university research and university-industry collaboration in host countries on the propensity of Japanese multinationals to conduct research and development (R&D) activities in these countries. Moreover, an overlooked aspect in foreign R&D location studies is the impact of university research and university-industry linkages on different types of R&D activities, such as basic research, applied research and development activities. This chapter addresses these questions about the impact of the strength of university research and the intensity of university-industry collaboration in the host country by examining foreign R&D location choices made by 498 Japanese multinationals in 24 host countries in 1996, distinguishing made between the types of R&D locations activities, namely basic research, applied research, development for global markets and development for local markets.
Furthermore, we explore to what extent there is strong heterogeneity in countries' response to university research depending on the types of industries to which the sample firms belong. We identify the existence of research and development activities in a host country based on the reported functions of foreign affiliates of firms in the host country. To measure these host country characteristics, we count the number of university publications and co-authored publications by researchers from universities and firms in the country at the industry level.
Second, we also construct the variable representing the intensity of collaborative research between universities and firms in the host country. The intensity of University-Industry collaboration in a host country is measured as the percentage of publications co-authored by researchers from universities and firms of the host country in the total university publications in the host country at the industry level (expressed in percentage points). The technological strength of the host country is expected to have a positive influence on the R&D location choices of multinational firms.
This variable is measured in years since the establishment of the firm's first subsidiary in the host country.
Empirical Results
Summary statistics and correlations for the variables in the analysis are given in Tables 3 and 4. The marginal effect of the intensity of collaborations is 0.009, which indicates that the share of co-publications increases by one percent (the collaboration variable is expressed in percentage points ) increases. in a host country leads to a 0.9 percentage point increase in the likelihood that companies will conduct R&D activities in the host country. For example, the level of demand in the host country appears to be more important for development, both in terms of magnitude of impact and level of significance.
This is particularly notable in the models with both university research and collaboration variables included (models 6 and 9). This would reflect the importance of local markets for development activities, as we see in the next table. The results show, both for research and development activities, that the variable of university research strength in the host country is highly significant for the under-selection of firms from high-tech sectors, while it has no significant effect for the firms from low-tech. sectors.
However, the research strength variable of universities only shows positive and significant effects in the selection process, although the collaboration variable works in both processes. 11 As discussed in the previous section, it is not possible to distinguish the amount of the company's expenditure on research from that on development in a host country. 12 It is not easy to decide which factor alone is effective in the selection process.
The results for these specifications are not qualitatively different from those shown in Table 8. We also examine the possibility that foreign R&D activities by MNCs are encouraged by the supply of well-educated R&D personnel who have graduated from universities and have completed research at a high level to the host country. From the UNESCO-OECD-Eurostat database, we obtained the number of graduates of tertiary education in natural sciences and engineering fields in the host country13.
Using the information, we constructed a variable, the supply of science and technology graduates by industry size, measured as the number of graduates from tertiary education institutes in the fields of science and technology in the host country, adjusted for the level of industry production in the host country. country. This result seems to indicate a dominant effect of the direct impact of university research on industrial R&D through university-industry linkages in the research process. This result indicates that research conducted by PROs in the host country can also be one of the factors that positively influence firms' decisions to conduct research activities in the country.
Conclusions
The PRO variable has a positive and significant impact only on research activities, while the magnitude of the impact is smaller and the level of significance is lower than that of the comparable variable, collaboration intensity. For example, the large market size of a host country may be a stronger determinant of location for foreign development activities than for research activities. Furthermore, the analysis revealed evidence of strong heterogeneity in the assessment of the importance of university research to international location decisions of both Research and Development activities.
Firms from high-tech industries respond significantly more strongly to the host country's strength in university research than firms from low-tech industries. First, improving university research will increase the attractiveness of a host country as a location for foreign companies' R&D activities. Thus, when policy makers use investment measures to attract R&D investment from abroad, it would be beneficial not only to improve the industrial environment, but also to strengthen university research and intensify university-industry links.
Second, it is also important for policymakers to consider what type of R&D activity they intend to attract from abroad. Our results show that a country with large markets would relatively easily receive R&D investment to adapt products to domestic markets, while applied research tends to be located in a country with intensive research collaboration between universities and companies. Therefore, they must take into account both the characteristics of their country and the type of R&D targets in order to effectively attract foreign companies to invest in R&D.
Since questions related to types of R&D activities carried out in host countries were not included in the latest versions of the survey (after fiscal year 2001), it is difficult to obtain the information in recent years. Moreover, the data on scientific publications in host countries are currently only available for the 1990s. However, in the future research we will update the dataset to a certain extent by supplementing the information from the latest available data.
This update also allows us to perform analysis with potentially more robust methodologies, such as panel data analysis. Second, the mechanism through which host country university research promotes the location of R&D investment by foreign firms is not clear enough. The effect of university research strengths on foreign R&D location decisions sometimes disappears when we include the supply of R&D personnel in the analysis.
Eds.), Handbook of the Economics of Innovation, Volume 1. Competitive advantages of in-house scientific research: The US pharmaceutical industry in the 1980s. A binary variable indicating whether the company carries out any of the four types of research and development activities in the host country 0.15 0.36 Research (Dep. Var.). Binary variable indicating whether the firm conducts basic or applied research in the host country 0.10 0.30 Development (Dep. Var.) Binary variable indicating whether the firm conducts development for global markets or development for local markets.
Global Markets (Dep. Var.) Binary variable indicating whether the company conducts development for global markets in the host country 0.10 0.30 Development for. Local Markets (Dep. Var.) Binary variable indicating whether the company is developing for local markets in the host country 0.15 0.36 Univ. Number of publications by ISI universities in the host country in the relevant field.
The share of co-authored ISI publications by researchers from host country universities and firms in the. Technological strength Logarithm of the number of Triadic patent applications filed in the host country in the. Market size Logarithm of (production + imports - exports) in a host country and sector (million US dollars) Labor costs of.
Orientation Dummy Dummy that takes the value 1 if a parent company conducts fundamental research 0.81 0.39 Sale of foreign branches. Dummy that takes the value 1 if affiliates of a company in a host country export their products to another host country. PRO research intensity Ratio of the number of PRO publications to the total number of university publications in a host country in the sector.
Number of graduates from tertiary education institutes in the fields of science and engineering in the host country. Number of ISI publications of universities located in a host country in a relevant field in the industry scaled by the number of graduates from tertiary education institutes in science and engineering fields in the host country. The number of ISI publications co-authored by researchers from host country universities and firms in the host country at the industry level, scaled by the number of graduates from tertiary education institutes in the fields of science and engineering.
Graduate Counts Logarithm of the number of graduates from higher education institutions in science and engineering. Industry Dummies Included Included Included Included Included Included Included Industry Dummies Included Included Included Included Included Included Included.
