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Regionalization of R&D activities: (Dis)economies of interdependence and inventive performance

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Abstract

This paper examines the impact of the extent of the regionalization of MNEs’ R&D activities on their inventive performance. By joining the regionalization theory with the recombinant view of invention, we challenge the implicit assumption that all foreign knowledge-seeking activities will necessarily offer new knowledge to the firm. We introduce the (dis)economies of interdependence, defined as the (dis)advantages that the firm derives due to the interdependence among countries within a region, as a new theoretical mechanism explaining the benefits and costs of regionalization. Our analysis of global pharmaceutical firms shows that an inverted U-shaped relationship exists between the number of regions in which a firm has R&D activities and its inventive performance. Our results also indicate that a firm’s recombinant capability moderates the inverted U-shaped relationship in such a way that, when a firm’s recombinant capability is high, it reaches its turning point in a larger number of regions and the inverted U-shaped relationship is flatter. These results underscore that recombinant capability significantly influences the firm’s ability to derive benefits and reduce costs from the regionalization of its R&D activities. Our findings suggest that it is through the consideration of the (dis)economies of interdependence that offers the essential reasoning needed to unwind the inferred assumption that all foreign knowledge-seeking activities will offer access to new knowledge.

Résumé

Cet article examine l’impact de l’ampleur de la régionalisation des activités de R&D des EMN sur leur performance inventive. En associant la théorie de la régionalisation à la vision recombinante de l’invention, nous remettons en question l’hypothèse implicite selon laquelle toutes les activités de recherche de connaissances à l’étranger offriront nécessairement de nouvelles connaissances à l’entreprise. Nous présentons les (dés)économies d’interdépendance, définies comme les (dés)avantages que l’entreprise tire de l’interdépendance entre les pays d’une région, comme un nouveau mécanisme théorique expliquant les avantages et les coûts de la régionalisation. Notre analyse d’entreprises pharmaceutiques mondiales montre qu’il existe une relation en forme de U inversé entre le nombre de régions dans lesquelles une entreprise a des activités de R&D et sa performance inventive. Nos résultats indiquent également que la capacité de recombinaison d’une entreprise modère la relation en forme de U inversé de telle sorte que lorsque la capacité de recombinaison d’une entreprise est élevée, elle atteint son point d’inflexion dans un plus grand nombre de régions et la relation en forme de U inversé est plus plate. Ces résultats soulignent que la capacité de recombinaison influence de façon significative la capacité de l’entreprise à tirer des avantages et à réduire les coûts de la régionalisation des activités de R&D. Nos résultats suggèrent que c’est par la prise en compte des (dés)économies d’interdépendance que l’on obtient le raisonnement essentiel nécessaire pour démanteler l’hypothèse inférée selon laquelle toutes les activités de recherche de connaissances à l’étranger donneront accès à de nouvelles connaissances.

Resumen

Este artículo examina el impacto del alcance de la regionalización de las actividades de I + D de las EMN en su desempeño inventivo. Al unir la teoría de regionalización con la visión recombinante de la invención, retamos la suposición implícita que todas las actividades en búsqueda de conocimiento en el extranjero necesariamente van a ofrecer nuevo conocimiento a la empresa. Introducimos las (des) economías de interdependencia, definidas como las (des) ventajas de que la empresa obtiene debido a la interdependencia entre los países dentro de una región, como un nuevo mecanismo teórico para explicar los beneficios y costos de la regionalización. Nuestro análisis de empresas farmacéuticas globales muestra que una relación invertida en forma de U invertida existe entre el número de regiones en los cuales una empresa tiene actividades de I + D y su desempeño inventivo. Nuestros resultados también indican que la capacidad recombinante de una empresa modera la relación en forma de U invertida de tal manera que cuando la capacidad recombinante de una empresa es alta, esta alcanza su punto de inflexión en un mayor número de regiones y la relación en forma de U invertida es plana. Estos resultados recalcan que la capacidad recombinante influencia significativamente la habilidad de la empresa para obtener beneficios y reducir costos de la regionalización de las actividades de I + D. Nuestros hallazgos sugieren que es a través de la interdependencia de las (des) economías que ofrece el razonamiento esencial necesario para deshacer la suposición deducida de que todas las actividades de búsqueda de conocimiento en el extranjero van a ofrecer acceso a nuevo conocimiento.

Resumo

Este artigo examina o impacto da extensão da regionalização das atividades de P&D das MNEs em seu desempenho inventivo. Ao mesclar a teoria da regionalização à visão recombinante da invenção, desafiamos a suposição implícita de que todas as atividades de busca de conhecimento estrangeiras necessariamente oferecerão novos conhecimentos à empresa. Introduzimos as (des) economias de interdependência, definidas como as (des) vantagens que a empresa obtém devido à interdependência entre os países de uma região, como um novo mecanismo teórico que explica os benefícios e custos da regionalização. Nossa análise de empresas farmacêuticas globais mostra que existe uma relação em forma de U invertido entre o número de regiões nas quais uma empresa possui atividades de P&D e seu desempenho inventivo. Nossos resultados também indicam que a capacidade recombinante de uma empresa modera o relacionamento em forma de U invertido de tal maneira que quando a capacidade recombinante de uma empresa é alta, ela atinge seu ponto de virada em um número maior de regiões e o relacionamento em forma de U invertido é mais plano. Esses resultados ressaltam que a capacidade recombinante influencia significativamente a capacidade da empresa de obter benefícios e reduzir custos com a regionalização de atividades de P&D. Nossas descobertas sugerem que é através da consideração das (des) economias de interdependência que oferecem o necessário racional essencial para relaxar a inferida suposição de que todas as atividades estrangeiras de busca de conhecimento oferecerão acesso a novos conhecimentos.

Chinese

本文研究跨国公司研发活动的区域化程度对其发明绩效的影响。通过将区域化理论与发明重组观相结合, 我们对所有外国寻求知识活动必将为公司提供新知识的隐含假设提出挑战。我们介绍了相互依赖的(反)经济, 它定义为公司由于区域内国家之间的相互依赖而获得的(反)优势, 作为解释区域化收益和成本的新理论机制。我们对全球制药公司的分析表明, 公司从事研发活动区域的数量与其发明创造之间存在倒U型关系。我们的结果还表明, 企业的重组能力以一种方式调节倒U形关系, 即当企业的重组能力较高时, 它会在更多数量的区域达到转折点, 且倒U形关系更加平坦。这些结果强调, 重组能力极大地影响了该公司从研发活动的区域化中获得收益并降低成本的能力。我们的发现表明, 正是通过考虑提供必要的推理来推断推论假设的相互依赖的(反)经济, 所有外国寻求知识的活动将提供获取新知识的途径。

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ACKNOWLEDGEMENTS

We appreciate the insightful comments and suggestions from Editor Alain Verbeke and three anonymous reviewers. We especially thank our Showcase Panelists, Yves Doz, Connie Helfat, David Teece, and Alain Verbeke at the SMS 38th Annual Conference, “Strategies in the Era of De-Globalization,” in Paris, France, whose collective works inspired this paper. The authors are also indebted to the many helpful discussions with treasured colleagues, including Rajshree Agarwal, Sharon Alvarez, Laura Cardinal, Ajai Gaur, Gwen Lee, Dan Levinthal, Chet Miller, Will Mitchell, Mahka Moeen, Ram Mudambi, Francisco Polidoro, Frank Rothaermel, Melissa Schilling, Deepak Somaya, Chris Tucci, Fred Walumbwa, Brian Wu, Margarethe Wiersema, and Ed Zajac. We dedicate this paper to Gideon Markman, the catalyst who brought us all together in Denver. Last, but certainly not least, the authors gratefully acknowledge the financial support provided by FIU CIBER and their respective institutions.

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Author notes

  1. Minyoung Kim, Curba Morris Lampert and Raja Roy have contributed equally to this work.

Authors and Affiliations

  1. School of Business, University of Kansas, 1654 Naismith Drive, Lawrence, KS, 66045, USA

    Minyoung Kim

  2. College of Business, Florida International University, 11200 S.W. 8th Street, Miami, FL, 33199, USA

    Curba Morris Lampert

  3. Martin Tuchman School of Management, New Jersey Institute of Technology, 4025 Central Avenue Building, Newark, NJ, 07102, USA

    Raja Roy

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  1. Minyoung Kim
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  2. Curba Morris Lampert
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Correspondence to Curba Morris Lampert.

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Accepted by Alain Verbeke, Editor-in-Chief, 1 December 2019. This article has been with the authors for two revisions.

Appendix

Appendix

See Table 3.

Table 3 Geographic details of our sample firms
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Kim, M., Lampert, C.M. & Roy, R. Regionalization of R&D activities: (Dis)economies of interdependence and inventive performance. J Int Bus Stud 51, 1054–1075 (2020). https://doi.org/10.1057/s41267-020-00314-0

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