Government R&D Support and the Internationalization Strategies of Korean Industries
This study examines whether the internationalization strategies of Korean multinational enterprises differ according to the R&D intensity of their industries and whether government R&D support influences these strategies.
Traditional theories suggest that firms invest abroad either to access foreign markets or to exploit comparative advantages across countries. However, firms in R&D-intensive industries may also invest abroad to acquire advanced technologies and knowledge, a motivation commonly referred to as technology sourcing.
Using an industry-country panel of Korean manufacturing industries from 2012 to 2016, we compare the determinants of overseas affiliate sales across industries with different levels of R&D intensity. The results indicate that industries with high R&D intensity tend to exhibit investment patterns that are less consistent with traditional comparative-advantage predictions, suggesting a greater role for technology-seeking motives. In contrast, industries with low R&D intensity display investment patterns that more closely follow conventional comparative-advantage considerations.
The study further investigates whether government R&D support alters these patterns. The findings suggest that the effects of government support vary depending on the industry's existing R&D intensity. This implies that industrial policies may influence not only firms' innovation activities but also their internationalization strategies and incentives to seek foreign technologies.
By linking government R&D policy with outward foreign direct investment, this study contributes to a growing literature on how industrial policy shapes the global expansion strategies of firms in emerging and newly industrialized economies.
Government R&D Support and the Internationalization Strategies of Korean Industries
This study examines whether the internationalization strategies of Korean multinational enterprises differ according to the R&D intensity of their industries and whether government R&D support influences these strategies.
Traditional theories suggest that firms invest abroad either to access foreign markets or to exploit comparative advantages across countries. However, firms in R&D-intensive industries may also invest abroad to acquire advanced technologies and knowledge, a motivation commonly referred to as technology sourcing.
Using an industry-country panel of Korean manufacturing industries from 2012 to 2016, we compare the determinants of overseas affiliate sales across industries with different levels of R&D intensity. The results indicate that industries with high R&D intensity tend to exhibit investment patterns that are less consistent with traditional comparative-advantage predictions, suggesting a greater role for technology-seeking motives. In contrast, industries with low R&D intensity display investment patterns that more closely follow conventional comparative-advantage considerations.
The study further investigates whether government R&D support alters these patterns. The findings suggest that the effects of government support vary depending on the industry's existing R&D intensity. This implies that industrial policies may influence not only firms' innovation activities but also their internationalization strategies and incentives to seek foreign technologies.
By linking government R&D policy with outward foreign direct investment, this study contributes to a growing literature on how industrial policy shapes the global expansion strategies of firms in emerging and newly industrialized economies.