Global innovation strategies of firms strengthen competitiveness of EU industry

Brussels, 15 February – A new study, entitled, ‘The role and internationalisation strategies of multinational companies in innovation’, has been released as part of European Commission DG Enterprise and Industry’s global review of innovation policies. The study was jointly prepared by the Austrian Institute of Economic Research (WIFO) and NIFU.

Brussels, 15 February – A new study, entitled, ‘The role and internationalisation strategies of multinational companies in innovation’, has been released as part of European Commission DG Enterprise and Industry’s global review of innovation policies. The study was jointly prepared by the Austrian Institute of Economic Research (WIFO) and NIFU.

The study summarises patterns of internationalisation in the knowledge-creating and knowledge-sourcing activities of multinational enterprises (MNEs) and provides evidence on the policy and non- policy factors determining the attractiveness of locations for innovation related Foreign Direct Investments (FDI) and the impact of global innovation strategies of MNEs on the host and home countries of FDI. It finds that outward innovation-related offshoring has a positive impact on home country competitiveness and that inward FDI boosts competitiveness and innovativeness, dependant on how embedded foreign affiliates are and the absorptive capability of local firms.

Such findings imply that it is sensible to support innovation related FDI by refraining from protectionist policies that prevent offshoring of R&D, as well as creating a comprehensive policy vision that integrates different policy areas. Vitally, the EU should increase its attractiveness as a location for innovation by improving framework conditions, such as quality education and research, and develop a competitive business environment with sound regulatory frameworks. Solutions should also be explored for encouraging international innovation and co-operation.

The full study is available here.

For more information, contact:

Yvonne Wolfmayr – Study co-ordinator
yvonne.wolfmayr@wifo.ac.at

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