Do Overseas R&D Laboratories in Emerging Markets Contribute to Home Knowledge Creation? An Extension of the Double Diamond Model

The double diamond model contends that both home and host locations affect MNE's international competitiveness. Drawing on the view that multinationals act as a link between home and host, we extend this framework and investigate the indirect impact of host on home location with reference to R&D internationalisation in emerging economies. By resorting to a sample of 221 large OECD regions from which R&D investments departed to the top six host emerging economies, we evaluate the contribution of different OECD R&D laboratories to the home knowledge creation of the OECD investing region. We test the complementarity between domestic R&D and different value-added R&D activities carried out by different technology-intensive R&D laboratories in terms of home knowledge creation of OECD investing regions. Our findings suggest that the activity of R&D laboratories focusing on adaptation complements domestic R&D in terms of knowledge creation regardless of the technological intensity of their operations, while the activity of medium technology-intensive R&D laboratories focusing on development is complementary to domestic R&D.