R&D, Innovation, and Internationalization

 

Research lines:

  • Internationalization, Innovation and Environment
  • R&D Coalitions and Innovation
  • Obstacles to Innovation

Members:
Maria Luisa Petit Tarascon, Francesca Sanna-Randaccio (leader), Roberta Sestini.

 

The group investigates the theoretical explanations and empirical implications of three interrelated phenomena: 
   1) technological innovation; 
   2) strategic behaviour of Multinational Enterprises (MNEs) in R&D intensive industries;
   3) national and multilateral policies on foreign direct investment (FDI) and globalization.

These research projects combine two strands of investigation previously followed by members of the group. 

A first line of analysis concerned the study of R&D investment decisions, applying optimal control and dynamic game methods. The other line of enquiry dealt with different aspects of firms’ choice of international strategy following a game-theoretic approach.  These two streams of research have converged, producing in the more recent years a series of results concerning firms’ innovative activities and international expansion via foreign direct investment (FDI). 

Our paper published in the International Journal of Industrial Organization (2000) opened a new line of research in the literature, endogenizing for the first time the R&D choice in a model analyzing firms’ international expansion decisions. The paper showed that multinational expansion incentivates R&D investment and that, in turn, investment in research increases the likelihood of multinational expansion. 

This line of analysis has produced a number of developments (and of publications in international journals) where both static and dynamic game methods have been employed considering firms that operate in an international oligopoly set-up. We dealt with the impact of FDI on both home and host countries, with the choice of producing abroad when inter-firm transmission of knowledge is limited in space, with the effects of asymmetric spillovers and with the role of M&A in the case of internationalization in the service sector.

Furthermore, our study published in the Journal of International Business Studies (2007) is another important contribution, as it represents the first analytical model appeared in the literature on R&D internationalization, highlighting the drivers of this important phenomenon.

Our research plans for the next few years concern three topics. Building on our previous analysis of firms’ internationalization, we will deal with the effects of unilateral environmental policies on firms’ decision to relocate production abroad. This research stream addresses the phenomenon of “carbon leakage”, which is a key policy issue both in the EU and the US. 

Then we plan to undertake empirical investigation on some of the topics previously subject to theoretical investigation, carrying out an econometric analysis of the obstacles to innovation perceived by various categories of firms in different Italian macro-area. This empirical study, based on data from the Community Innovation Survey, will be part of a project of future collaboration with the London School of Economics and the SPRU, University of Sussex, U.K.

Besides, applying new mathematical tools (coalitions and networks theory), we will analyze the endogenous formation of R&D coalitions between firms. Our aim is to provide a model in which firms can decide not only to form a research joint venture, but also the timing of the investment in R&D. In other words, both the coalition formation process and the timing of the investment will be endogenized.

Project managed by CIDEI:
(Centro Interdipartimentale di Economia Internazionale)
GARNET - Nerwork of Excellence on Global Governance, Regionalization and Regulation: The Role of the EU
June 2006- May 2010 –UE- FP6

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