Unbundling R&D and manufacturing: Postindustrial myth or economic reality?

  • Ketokivi M
  • Ali-Yrkkö J
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Abstract

Understanding determinants of business location decisions is important from the point of view of economic policy. While the determinants of manufacturing and R&D location have been extensively covered in the literature, in this article we examine a largely neglected question: Under what conditions do manufacturing and R&D have to be physically colocated, that is, when is unbundling the two impossible? In a sample of 241 Finnish industrial firms, we find that unbundling R&D and manufacturing is possible for some companies but indeed a postindustrial myth of sorts for many others. The need for colocation correlates with knowledge intensity of activities: product complexity, process complexity, and industry rate of change, but interestingly enough, not with the size of the firm's R&D budget.

Author-supplied keywords

  • Business location decisions
  • Colocation
  • Inseparabilities
  • Knowledge intensity
  • Manufacturing
  • R&D
  • Unbundling

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