International Technology Sourcing Strategies And Inventor Employment



This study investigates the extent to which domestic and foreign R&D workers (i.e. “inventors”) employed by multinationals (MNEs) are complements or substitutes to each other. We argue that this relationship will be contingent on the strategy underlying MNEs’ foreign R&D activities, where we identify three such strategies: technological catch-up, technological diversification, and creating a R&D springboard. In the case of catch-up, we don’t expect to find complementarities, but instead either substitution or no relationship at all. Under diversification, we expect complementarities to arise at intermediate levels of technical (dis)similarity between the domestic and foreign operations. Finally, in the case of R&D springboards, we also expect complementarities to arise. These expectations are largely corroborated in a sample of large and innovative European MNEs during the period 1995-2005.