Learning in collaborative R&D: When multinationality matters

We explore when and why MNCs invest more in collaborative R&D than domestic firms. The received wisdom in R&D research is that firms invest more in R&D when strong capabilities lead them to expect higher returns. Yet the stronger firms' capabilities get, the greater their incentives to specialise and the lesser their incentives to collaborate. Prior research resolved this paradox by concluding that firms with strong capabilities do their own R&D, while those with weak capabilities partner with others. However, some firms choose to invest in collaborative R&D despite having strong capabilities. We discuss a multinationality-asymmetry: MNCs and domestic firms invest differentially in collaborative R&D depending on their approach to learning. Using a random sample of manufacturing firms in Japan, we hypothesise and find that MNCs invest less than domestic firms in collaborative R&D when they learn anticipatorily, more when they learn experientially, and equally when they learn vicariously. These differences are significant when and only when firms are motivated to ( re) build capabilities. Asian Business & Management (2011) 10, 9-36. doi:10.1057/abm.2010.34; published online 15 December 2010