R & D Activities in Affiliates of Swedish Multinational Enterprises

Abstract

The fact that multinational enterprises (MNEs) do not undertake all their research and development (R & D) activities at home has become a matter of recent concern, both in the home and host countries of these companies. Some empirical work has been done on the question of why MNEs decentralize their RD see Mansfield et al. (1979), Lall (1979), H~akansson (1980) and Hirschey and Caves (1981).' To the best of my knowledge, the study by HWkansson (1980) is the only one that deals with the determinants of the R& D intensity of MNE affiliates, but it is confined to subsidiaries that carry out R& D, while foreign affiliates that do not are excluded.2 Furthermore, the analysis does not take into account the characteristics of the MNE to which the affiliates belong. Our study investigates the factors that explain the R & D intensity of foreign subsidiaries of Swedish MNEs, using data for 1978. Following Haikansson (1980), we concentrate on the technological capabilities developed at the subsidiary level, but in contrast to him, we take into account both affiliate, host country, and parent company characteristics. Furthermore, our sample includes those foreign affiliates that do not perform R & D, which leads us to use a Tobit model. The study proceeds as follows. Section II focuses on some factors of importance in determining the amount of research activity carried out by foreign affiliates. In Section III we present the data and describe the model and method of estimation used. The empirical results are presented in Section IV. We draw the main conclusions in Section V.

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