Internationalisation of R& D and embeddedness: the case of Austria

Internationalisation of corporate R& D-driven mainly by multinational enterprises (MNEs)-has received increasing interest recently. As a small open economy, Austria faces special challenges with regard to this on-going process. The share of Austrian R& D financed from abroad is outstanding in international comparison. Indeed, a significant portion of R& D activities in Austria is defined by strategic decisions of international corporations, which are re-assessing their spatial division of labour continuously. In our paper, we analyse the characteristics of these foreign-owned corporations in Austria and demonstrate that they form the more 'modern' part of Austrian industry. At the same time, we show that these companies and R& D facilities are embedded in the Austrian national innovation system (NIS) to a large extent. This embeddedness is also explicitly and implicitly supported by the Austrian technology policy. We conclude that this high degree of embeddedness in the NIS may be crucial for the sustainability of foreign-owned R& D facilities.