Factors of Location Decisions by Foreign R&D Affiliates: A Quantitative Location Decision Analysis
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
There are many contributions to the analysis of location of choice by multinational firms, but less in the specific context of when these firms choose to locate their R&D abroad. This research builds upon the research of Siedschlag et. al.(2013) with some further extensions. By using an original data set consisting of a sample of 1275 location decision by foreign R&D affiliates in the NUTS 2 regions within the EU over the years 2001-2011 it is revealed that over 50 percent of the location choices have been done within the UK and Germany while the 5 most popular
NUTS 2 stand for nearly 20 percent of the locations occurring during the observation period. A Conditional Logit model is used to estimate the factors influencing the location decisions. The variables used are market size, market access, unemployment, compensation per employee, human capital, agglomeration, corporate tax rate, count of universities and patent intensity. The results of the estimations on the full sample suggest that market size and agglomeration are the
primary motivators for locating in a certain region. Other factors is revealed to be important when looking at R&D affiliates of North American and European origin respectively. Besides market size and agglomeration, those of North American origin are influenced by human capital of a region, while those of European origin are influenced by labors costs instead. It is thus theorized that distance between origin and the location set could have an impact on which factors drive the choice of location for foreign R&D affiliates.
Place, publisher, year, edition, pages
2015. , 35 p.
Location Analysis, R&D, Conditional Logit, Firm Location Choice, Multinational firms
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-190936OAI: oai:DiVA.org:kth-190936DiVA: diva2:953803