Management of Offshore R&D in China: Cross Country Differences in Motivation and Performance

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Kazuyuki Motohash

Abstract

In this paper, multinationals’ motivations for R&D in China are compared across frms’ home countries. It is found that fve types of companies (Europe, Japan, the other Asia, US and Taiwan, Hong Kong or Macau owned) can be grouped into two. Europe, Japan and the other Asia for production/ market driven R&D, but the degree of market orientation is stronger for European frms, followed by Japanese and the other Asia. Another group is US and THKM frms for technology/cost driven R&D. It should be noted that THKM frms are inclined toward production oriented R&D as well. We have also investigated the relationship between types of R&D activities and frms’ performances. In general, US frms are more proftable than Japanese ones, but this difference in proftability disappears once it is controlled for R&D type variables. In terms of an association of R&D type variables with proftability, heterogeneous results are obtained by host countries. The degree of linkage with universities and PRIs is signifcant for US frms, while the degree of R&D linkage with home country is important for European frms. It is also found that frm age is strongly correlated with proftability, while whether a frm is a joint venture with a local company or a wholly owned subsidiary does not make any difference.

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