Details
| Original language | English |
|---|---|
| Article number | 104326 |
| Journal | Research policy |
| Volume | 50 |
| Issue number | 9 |
| Early online date | 28 Jul 2021 |
| Publication status | Published - Nov 2021 |
| Externally published | Yes |
Abstract
Existing evidence shows that R&D tax incentives boost countries’ private sector R&D. Given the importance of multinational enterprises (MNEs) for private sector innovation, it is unclear, however, whether firms engage in genuinely new R&D or whether R&D is reallocated across borders. Drawing on data on unconsolidated R&D activity of MNEs in Europe, we provide evidence that responses are dominated by cross-border relocations: More generous tax incentives in one country increase MNEs’ R&D investments in affiliates located there, while lowering R&D investments in affiliates of the same MNE group located in other countries. Globally, firms hardly raise their R&D activities when tax incentives become more generous.
Keywords
- Multinational firms, R&D investment, R&D tax incentives
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Strategy and Management
- Decision Sciences(all)
- Management Science and Operations Research
- Business, Management and Accounting(all)
- Management of Technology and Innovation
Sustainable Development Goals
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In: Research policy, Vol. 50, No. 9, 104326, 11.2021.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Cross-border effects of R&D tax incentives
AU - Knoll, Bodo
AU - Riedel, Nadine
AU - Schwab, Thomas
AU - Todtenhaupt, Maximilian
AU - Voget, Johannes
PY - 2021/11
Y1 - 2021/11
N2 - Existing evidence shows that R&D tax incentives boost countries’ private sector R&D. Given the importance of multinational enterprises (MNEs) for private sector innovation, it is unclear, however, whether firms engage in genuinely new R&D or whether R&D is reallocated across borders. Drawing on data on unconsolidated R&D activity of MNEs in Europe, we provide evidence that responses are dominated by cross-border relocations: More generous tax incentives in one country increase MNEs’ R&D investments in affiliates located there, while lowering R&D investments in affiliates of the same MNE group located in other countries. Globally, firms hardly raise their R&D activities when tax incentives become more generous.
AB - Existing evidence shows that R&D tax incentives boost countries’ private sector R&D. Given the importance of multinational enterprises (MNEs) for private sector innovation, it is unclear, however, whether firms engage in genuinely new R&D or whether R&D is reallocated across borders. Drawing on data on unconsolidated R&D activity of MNEs in Europe, we provide evidence that responses are dominated by cross-border relocations: More generous tax incentives in one country increase MNEs’ R&D investments in affiliates located there, while lowering R&D investments in affiliates of the same MNE group located in other countries. Globally, firms hardly raise their R&D activities when tax incentives become more generous.
KW - Multinational firms
KW - R&D investment
KW - R&D tax incentives
UR - http://www.scopus.com/inward/record.url?scp=85111253675&partnerID=8YFLogxK
U2 - 10.1016/j.respol.2021.104326
DO - 10.1016/j.respol.2021.104326
M3 - Article
AN - SCOPUS:85111253675
VL - 50
JO - Research policy
JF - Research policy
SN - 0048-7333
IS - 9
M1 - 104326
ER -