Phone Home? Headquarters Involvement in Foreign University Collaboration

Although extant research has emphasized the benefits of proximity in industry-science linkages, a substantial share of research collaborations between firms and universities are international in scope. This study analyzes why firms opt for international versus local research collaborations with foreign universities, taking their network of R&D locations as given. In particular, we study under what conditions firms do not rely on their local R&D unit to collaborate with a foreign university but opt for a distant collaboration from their central R&D unit at the headquarter location. We argue that the decision to collaborate at distance is a function of opportunities to generate scale and scope economies in R&D, the nature of the generated knowledge (degree of novelty) and appropriation concerns due to possible spillovers to local rivals. We test our hypotheses on a dataset of more than 64,000 geocoded scientific publications by 148 US, European and Japanese firms in the global biopharmaceutical industry covering the period 1995-2003. Our findings contribute to the literature on the global organization of R&D activities - and industry-science links in particular – by showing under what conditions firms may forego the benefits of proximity in doing R&D with an external partner. By and large, the findings indicate that the key reasons to conduct R&D with foreign universities through the headquarter location are strategic and economic in nature.