Additionality or opportunism: Do host-country RD subsidies impact innovation in foreign MNC subsidiaries?

摘要

Host-country policies shape the incentives and opportunities of MNC subsidiaries to innovate. However, prior research largely ignores the agency of foreign MNC subsidiaries receiving government RD subsidies from their host countries. Subsidiaries may increase RD investments and innovation outputs as intended by governments or merely accept the additional funds while continuing RD programs that they would have undertaken anyway. In this exploratory study, we investigate whether RD subsidies trigger additional input, output, and behavioral innovation effects in foreign MNC subsidiaries. Based on longitudinal data from Germany, we find that foreign MNC subsidiaries increase their RD investments more than comparable domestic firms in response to an RD subsidy. Moreover, MNC subsidiaries experience comparatively stronger effects in innovation performance from subsidy-induced RD. However, subsidies also shift attention away from the subsidiaries' original RD activities. We interpret our findings by integrating theory from subsidy additionality literature into models of MNC subsidiary innovation. Our findings have implications for both MNC subsidiaries and policymakers who seek to attract foreign RD investment in a host country.