The cross border R&D activity of italian business firms

Using data from the ISTAT-RS1 Survey we explore inward and outward R&D activities of different categories of firms resident in Italy in 2001-2010. From this perspective we provide detailed evidence of the role played by this country in the global creation and transmission of technology. First, foreign owned multinationals are the most active in cross-border transactions of knowledge but hold a low and decreasing share in national R&D expenditure. This trend reveals on the one hand that the Italian economy is a poorer and poorer attractor of high value added investments from abroad; and on the other hand that national companies, and particularly local SMEs not belonging to international groups, have significantly increased their R&D efforts over the past decade. Second, although outward expenditures of Italian companies increased substantially, R&D performed abroad remains a minor component of business research activities, and is due to a small number of firms investing in a few destination countries. We argue that this paucity of outward R&D activity might hinder both “asset exploiting” and “asset seeking” strategies of Italian firms. Third, we find a strong positive correlation between outward R&D and other innovative activities, including domestic research and R&D commissioned to foreign affiliates. By contrast, in the case of foreign owned firms active in Italy, we find that outward R&D is negatively correlated with intra-group technical cooperation.