Varieties of Regional Innovation Systems in Host Countries and Their Impact on the Foreign Research and Development Strategies of Multinational Enterprises: Evidence from China

Jian, Mi GND

In the past few decades, we have witnessed an increasing amount of offshore research and development (R&D) activities of multinational enterprises (MNEs). These activities took place mainly within developed countries during the 1980s and had been increasingly heading to emerging markets since the 1990s.
Understanding the interaction between foreign R&D activities and host location is critical for both business managers and policymakers to benefit from the changing landscape. Compared to the existing international business studies on foreign R&D, this dissertation, being one of the first attempts, integrates the diversity of institutional structures into the host location factors that explain foreign R&D strategies. By using the under-researched host location – China as the study background, it examines the features of foreign R&D activities in China and the Chinese innovation system at both national and regional levels. Additionally, it investigates the impact of regional innovation systems (RISs) on foreign R&D intensity and foreign R&D strategies.
As a result, the dissertation identifies four types of foreign R&D strategies that are categorized by MNEs’ motivations (home-based exploiting (HBE) vs. home-based augmenting (HBA) strategy) and R&D networks (in-house vs. collaborative network). It discovers four types of Chinese RISs that are classified by regions’ institutional structure (dominate developmental system (DDS) vs. business corporatist system (BCS) vs. state planned system (SPS)) and actor structure (knowledge application and exploitation system (KAES) vs. knowledge generation and diffusion system (KGDS)).
Furthermore, the dissertation finds that host RISs influence both foreign R&D intensity and foreign R&D strategies. In terms of the former, foreign R&D intensity is found positively influenced by the abundance of qualified labor and scientific resources, the quality of market institutions, and the amount of existing foreign direct investment in a RIS. In terms of the latter, in-house HBE and in-house HBA R&D strategies are found to be dominantly undertaken by MNEs in the KAES-and DDS-oriented and KGDS- and DDS-oriented RISs, respectively.
By contrast, collaborative HBE R&D strategy is commonly undertaken in either the KAES-and BCS-oriented or KAES-and SPS-oriented RIS. While the structure of actors implies the structure of resources for undertaking different types of R&D, the structure of institutions in a RIS that was erected by actors pursuing the most efficient institutions for certain business activities, in turn, shapes the future business strategies of MNEs.

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Jian, Mi: Varieties of Regional Innovation Systems in Host Countries and Their Impact on the Foreign Research and Development Strategies of Multinational Enterprises: Evidence from China. 2019.

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