Transnational R&D Centers and National Innovation Systems in Host Countries: Empirical Evidence from China

With globalization of research and development (R&D), an increasing number of transnational R&D centers have been established in developing countries, including China. However, how these transnational R&D centers affect the host country's national innovation system (NIS) is still not clear. Building on the literature, this article puts forward hypotheses about transnational R&D centers' embedment process, which is gradually adaptive, cooperative, and dynamic. It then tests the hypotheses by means of a unique survey on transnational R&D centers in China. The results indicate that the embedding of transnational R&D centers has positive effects on the host country's NIS. Relational embedding, structural embedding, and virtual embedding have different influences with different lag periods of effects; the first two modes are the most influential. Transnational R&D centers in China still remain at the early stage of embedding. This article suggests that the Chinese government should take several measures to maximize the positive influences of transnational R&D centers on China's NIS.