Multinational Enterprises and Innovation : Firm level evidence on spillover via R&D collaboration

This paper estimates the knowledge spillovers to multinational firms (MNEs) in Sweden via domestic and foreign R&D collaboration. Applying an augmented GMM-estimator that accounts for both selectivity and simultaneity bias on data from 1,249 MNEs, our research has resulted in five distinct conclusions. First, we find that the knowledge spillovers via R&D collaboration typically take place as a network phenomenon rather than a process between the local firm and a single innovation partner. Second, successful collaboration is conditional on foreign innovation partners in the network. Third, output is found to be an increasing function of R&D-collaboration only among non-export oriented firms. Fourth, foreign MNEs selling mainly to local and regional markets in Sweden benefit more from R&D collaboration than other firms. Overall, the results show that demand driven motives that require entrepreneurial knowledge to adapt products to local consumers and markets are more important for successful R&D-collaboration than supply driven motives.QC 2012020