Localization and overseas <scp>R&D</scp> activity: the case of <scp>T</scp>aiwanese multinational enterprises in <scp>C</scp>hina

<jats:p>This study investigates the determinants of overseas research and development (<jats:styled-content style="fixed-case">R&D</jats:styled-content>) and the influences of various aspects of localization on affiliates' <jats:styled-content style="fixed-case">R&D</jats:styled-content> intensity. Using a dataset of <jats:styled-content style="fixed-case">T</jats:styled-content>aiwanese multinational enterprises (<jats:styled-content style="fixed-case">MNE</jats:styled-content>s) in <jats:styled-content style="fixed-case">C</jats:styled-content>hina, the empirical estimations find that <jats:styled-content style="fixed-case">MNE</jats:styled-content>s with a larger firm size, more <jats:styled-content style="fixed-case">R&D</jats:styled-content> expenditure, and a higher outward foreign direct investments intensity tend to undertake <jats:styled-content style="fixed-case">R&D</jats:styled-content>. Host regions' characteristics, particularly market size and <jats:styled-content style="fixed-case">R&D</jats:styled-content> resources, do matter for attracting <jats:styled-content style="fixed-case">MNE</jats:styled-content>s to conduct <jats:styled-content style="fixed-case">R&D</jats:styled-content> locally. Crucially, affiliates' <jats:styled-content style="fixed-case">R&D</jats:styled-content> intensity is related to the degree of localization. The degree of market localization and localization of the <jats:styled-content style="fixed-case">R&D</jats:styled-content> network has a positive association with affiliates' <jats:styled-content style="fixed-case">R&D</jats:styled-content> intensity. From the perspective of <jats:styled-content style="fixed-case">R&D</jats:styled-content> policy, a country with healthy <jats:styled-content style="fixed-case">R&D</jats:styled-content> infrastructures helps attract the establishment of <jats:styled-content style="fixed-case">R&D</jats:styled-content> labs of <jats:styled-content style="fixed-case">MNE</jats:styled-content>s.</jats:p>