Factors determining the home region and inter-triad R&D location choice

This paper looks at factors determining the home region and inter-triad R&D This paper examines the impact of home and host country, industry and firm level variables on R&D project location choice between MNEs’ home region and other triad regions. The study is based on a panel of data from 954 MNEs. It employs the random effects probit method of estimation by using 1900 R&D projects offshored by MNEs. We draw on the extended OLI paradigm to develop our hypotheses. At the country level, findings show that the R&D wage difference and knowledge infrastructure difference between home and host countries of R&D projects increases the propensity to offshore R&D projects inter-triad (regions other than the MNE’s own region). At the firm level, the MNE’s previous international R&D experience with a particular technology and previous experience in the host destination are found to increase the propensity to offshore inter-triad. However, the R&D project’s global market orientation increases the propensity to offshore within the MNE’s own triad region