The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DIn year 2003, U.S. multinational companies spent 1.4 billion dollars on R&D performedin Sweden. U.S.-owned multinational companies accounted for about 16 percent of thetotal R&D performed in Sweden. European-owned (excluding the Nordic countries)accounted for about 24 percent, while multinational companies owned by a parent companyfrom a Nordic country accounted for about 3 percent of the expenditure.The 20 largest, Swedish-owned manufacturing companies spent about 2.6 billiondollars outside of Sweden in 2003. Swedish-owned companies spent 1.4 billion dollarsrelated to R&D in the EU-15 and 0.7 billion dollars in the U.S. in 2003.When interpreting these figures for inward and outward R&D performance, it is importantto remember that change in ownership is the most common impetus for R&Dinvestment to change origin. It is very seldom that a multinational company actuallymoves its R&D activities to a new region.4.4.1 Foreign-Owned Companies Performing R&D in SwedenThis section first discusses the recent empirical literature concerning inward R&Dperformance and then reviews inward R&D performance trends.Studies Concerning Inward R&DBandick & Hanson (2006) examined whether advanced production and R&D tend toincrease or move out of Sweden when Swedish companies become foreign-owned.They used ITPS data on total employment abroad and combined that data with financialaccount data from SCB, covering R&D expenditure in Sweden. They found noevidence that foreign-owned companies acquiring Swedish multinational companiesremoved R&D activity from Sweden. They found that the share of high-skilled workersseemed to increase when non-multinational 9 Swedish companies become foreignowned,but not when Swedish multinational companies change ownership. This suggeststhat technology sourcing is an important motive behind the acquisitions ofSwedish multinational companies.Ebersberger & Lööf (2005) studied the innovation behavior and productivity performanceof foreign-owned companies in the Nordic region. They used the internationallyharmonized Community Innovation Survey III (CIS3) data to study whether foreignownedcompanies differ systematically from domestic companies. The companies theystudied were divided into six groups:• Domestic-owned 10 multinational companies• Nordic-owned 11 multinational companies9 Non-multinational companies are defined as companies without affiliates abroad.10 Domestic-owned companies are defined as companies with the majority ownership in some of the Nordic countries.112