RESEARCH AND TRANSFER OF TECHNOLOGY BY MULTINATIONAL ENTERPRISES

• Published in: Oxford bulletin of economics and statistics 1981-05, Vol.43 (2), p.115-130
• Main Authors: Hirschey, Robert C., Caves, Richard E.
• Format: Article
• Language: English
• Subjects: Affiliates; Facilities; Foreign; International; Multinational corporations; Production; R&D; Regression analysis; Research & development; Technology transfer
• ISSN: 0305-9049; 1468-0084
• DOI: 10.1111/j.1468-0084.1981.mp43002001.x

Although research and development (R & D) is normally considered a head-office function of the corporation, US-based multinational enterprises have been placing 12% of their R & D expenditures abroad. A model is utilized to show how the US multinational develops and transfers its new technology assets: how much research it undertakes overseas, and how much it relies on transferring technology produced in the US. The findings show that the proportion of US multinationals' global R & D outlays that are spent overseas depend positively on the extent to which the multinationals' foreign markets are served by their subsidiaries' local production; negatively on scale economies in research activity; positively on the need to adapt the product to local market conditions; and positively on the importance of basic research. Additional findings show that overseas R & D and technology exports are complements, and that domestic R & D yields less technology for transfer abroad, where basic research is important and where the product requires extensive adaptation to the local market.