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Role of home and host country innovation systems in r&d internationalisation: a patent citation analysis

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This paper has three novelties. First, we argue that any given R&D facility's capacity to exploit and/or augment technological competences is a function not just of its own resources, but the efficiency with which it can utilise complementary resources associated with the relevant local innovation system. Just as asset-augmenting activities require proximity to the economic units (and thus the innovation system) from which they seek to learn, asset-exploiting activities draw from the parent's technological resources as well as from the other assets of the home location's innovation system. Furthermore, we argue that most firms tend to undertake both asset exploiting and augmenting activities simultaneously. Second, we use patent citation data from the European Patent Office to quantify the relative asset augmenting vs. exploiting character of foreign-located R&D. Third, we do so for European MNEs located in the US, as well as US MNEs located in Europe. Our results indicate that both EU (US) affiliates in the US (EU) rely extensively on home region knowledge sources, although they appear to exploit the host country knowledge base as well.

Keywords: Asset-augmentation; Innovation systems; Internationalisation; Knowledge flows; Multinational enterprises; Patent citation analysis; R&D; Spillovers

Document Type: Research Article


Affiliations: 1: ECIS, Eindhoven University of Technology, PO Box 513, 5600, MB, Eindhoven, The Netherlands 2: University of Reading Business School, PO Box 218, Whiteknights, Reading, RG6 6AA, UK

Publication date: July 1, 2005

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