Work

R&D investments in knowledge intensive sectors in developing countries and the role of host country political uncertainty

Year: 2024

Type: article

Abstract: Multinational enterprises (MNEs) persistently navigate environments characterized by political uncertainty. Yet, it is unclear how such uncertainty affects the location and sectoral spread of MNEs' overseas research and development (R&D) investments. This study delves into the influence of political uncertainty on R&D investments within knowledge‐intensive sectors, particularly in developing nations, thus enhancing our understanding of the contextual variables at play. Using a unique data set of MNE greenfield R&D global investment projects over the period 2003–2019, we show that political uncertainty has a negative effect on R&D capital investments. Additionally, we explore sector and host country location‐specific boundary conditions that moderate this relationship and find support for our hypotheses. Our findings show that MNE R&D investments in science‐based sectors (SBS) and knowledge‐intensive business services (KIBS) sectors in developing countries are less susceptible to political uncertainty compared to developed countries. Our results call for more attention from MNEs' managers and policymakers to political developments in their investing countries.

Source: R and D Management

DOI: 10.1111/radm.12728

Authors: Evis Sinani, Bernhard Dachs, Bersant Hobdari, Marina Papanastassiou

Institutions: Copenhagen Business School, AIT Austrian Institute of Technology GmbH, University of Leeds, Carnegie Mellon University Qatar, Carnegie Mellon University

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Peace, justice, and strong institutions, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,620