Location advantages and subsidiaries’ R&D activities in emerging economies: Exploring the effect of employee mobility

Abstract

With multinational corporations increasingly seeking subsidiaries’ specific advantages in foreign countries to develop their innovative capabilities, internationalization of research and development has been greatly emphasized. However, in emerging economies, managers are encountering the challenge of high employee mobility under the weak intellectual property protection regime. This article investigates subsidiaries’ employee mobility and proposes that it negatively moderates the relationship between location advantages and the level of subsidiaries’ R&D. This article extends R&D internationalization and enhances current understanding of subsidiaries’ R&D activities. Further, it provides managerial implications as to how managers can improve R&D outcome by mitigating obstacles in emerging economies. Copyright Springer Science+Business Media, LLC 2007Employee mobility, Intellectual property protection, Location advantages, Subsidiaries’ R&D,

Intellectual Property Infringements Due to R&D Abroad? A Comparative Analysis Between Firms with International and Domestic R&D Activities

“…For R&D activities in developing countries, the usage of formal protection methods can be ineffective since weak IPR systems restrict effective enforcement of the intellectual property rights. A mix of legal, operational and strategic activities (Yang and Jiang, 2007;Yang et al, 2008) or de-facto strategies which make use of cultural laws in host countries (Keupp et al, 2010) can be more effective against IP infringements. The following explorative study reveals some of these strategies implemented in German firms in China.…”

Global Interdependence of Collaborative R&D-Typology and Association of International Co-Patenting

“…Due to the fact that there is no direct measurement on international R&D, indirect methods have been used to understand internationalization of R&D [33][34][35][36][37]. However, this study aims to use patent as a proxy for measuring the global landscape of international R&D for the following reasons: (1) patent has been widely accepted in innovation study [69][70][71][72][73]; (2) patent document provides information of inventor and assignee countries which readily facilitate international comparison and internationalization study; and (3) the use of patent to measure internationalization has been confirmed by OECD [74,75].…”

“…Since there is no direct approach, prior studies utilized indirect approaches which might be limited by incomplete data and thus lead the comparison among countries difficult. Those indirect approaches used in literature for measuring international R&D were, for example, foreign direct investments in R&D [33], foreign-affiliated R&D laboratories [34], foreign-owned R&D facilities [33], outsourced offshore R&D service [35], employees mobility [36,37], R&D and innovation surveys for obtaining up-to-date and detailed company-level data [23], patent citation [19], and international co-patenting [27,28,38,39]. In addition, the relationship between innovation and internationalization [40] was compared and a framework for analyzing different patterns of internationalization of R&D and innovation was proposed [41].…”

Structure offshoring and returns on offshoring

“…To implement activities geographically, for example, offshoring firms must manage operations in unfamiliar countries, with attendant increases in transaction and management costs (Luo, 2002;Peng, 2002;Zaheer, 1995). Additionally, the high employee mobility might occur in foreign locations, driving firms to increase wages for current skilled employees (Madsen, Mosakowski, & Zaheer, 2003;Yang & Jiang, 2007). Furthermore, a firm sourcing activities from multiple internal and external providers in different countries is likely to face more constraints (Hennart, 2007).…”