Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/317849 
Year of Publication: 
2023
Citation: 
[Journal:] The Journal of Technology Transfer [ISSN:] 1573-7047 [Volume:] 49 [Issue:] 2 [Publisher:] Springer US [Place:] New York [Year:] 2023 [Pages:] 740-781
Publisher: 
Springer US, New York
Abstract: 
Abstract The subsidiaries of foreign-owned multinational firms make significant contributions to national Research and Development (R&D) in many host countries. Policymakers in host countries often support subsidiaries’ R&D efforts, through R&D grants and R&D tax credits. A key objective of this funding is to leverage R&D-driven firm performance benefits for the host economy. However, the subsidiary's parent firm may decide not to commercially exploit the results from host country-funded R&D projects, in the host country. Therefore, supporting subsidiaries’ R&D presents a unique risk, that significant amounts of scarce public R&D funding may translate into little, or no firm performance payoffs for the host economy. To address this issue, we construct a unique panel dataset, containing 24,404 observations of firms in Ireland over a 10-year period. Using this rich data, we first evaluate the impact of R&D grants and R&D tax credits on subsidiaries’ R&D. We then examine the link between policy-induced R&D from each policy instrument, and subsidiaries’ firm performance in the host country. Our study provides the first evaluation of (1) whether public R&D funding stimulates additional R&D investment in subsidiaries, (2) whether policy-induced R&D drives subsidiaries’ firm performance in the host country, and (3) the differential effects of R&D grants and R&D tax credits. We find that both R&D policy instruments drive subsidiary R&D, and that the policy-induced R&D results in substantial host country improvements in turnover, exports, and value added. Our results suggest several policy implications, particularly for economies pursuing an R&D strategy which targets foreign-owned subsidiaries.
Subjects: 
Public support for R&D
Foreign-owned subsidiaries
Firm performance
Multinational enterprises (MNEs)
R&D grants
R&D tax credits
Persistent Identifier of the first edition: 
Additional Information: 
D22;O25;D04;H25;O31
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version
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