International R&D and MNCs' innovation performance: An integrated approach

Abstract

We propose an integrated framework establishing the environmental and organizational contingencies under which the international dispersion of R&D activities benefits innovation performance in multinational firms. We suggest that R&D dispersion is more likely to enhance innovation performance – the smaller economies of scale and scope in R&D, the greater the technological strength of R&D locations and the stronger intra-firm knowledge integration. Employing a panel dataset of 175 R&D intensive US, EU, and Japanese firms, our findings provide support for this framework and suggest that these contingencies need to be taken into account simultaneously. Technology diversification strengthens rather than weakens the relationship between international R&D and performance, which we attribute to the positive influence of recombining knowledge sourced across diverse locations.