Exploring the determinants of location choice decisions of offshored R&D projects

Abstract

This article extends the understanding of R&D offshoring with a particular micro-level focus on the determinants of location choice decisions for R&D activities at the project level. Using multinomial logistic regression, supplemented with PLS modelling, the article adopts an innovative R&D project-level approach to examine the key determinants of the location choice decisions made by 126 UK-based MNEs. The findings demonstrate that project characteristics—such as speed, quality, interactivity, innovativeness, and routineness—have a greater impact on location choice decisions than traditional considerations such as cost and wage, which have been extensively examined. We further find that the classification of R&D projects is not one of the key determinants of R&D project location-related decisions. Theoretically, the article uses an approach proposed by Demirbag and Glaister (2010), combined with Dunning's OLI framework, to highlight the scope for utilizing integrated theoretical frameworks to investigate location choice decisions for R&D offshoring within IB studies. We draw implications for research and practice.

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