Outward R&D Investment and Host-Country Patenting of German Multinational Companies

As innovation is not directly measurable, the author deploys the proxy of patents to analyze the R&D activity of the German companies with the biggest R&D spending in 2015. Through the method of partial-counting of patents filed with the ‘European Patent Office' (EPO) and under the ‘Patent Cooperation Treaty' (PCT), provided by the OECD REGPAT database, the author determines for the years 2008 and 2012 how many patents have been created respectively with domestic and foreign inventors. Host-country patents, i.e. patents with foreign inventors indicate, that the underlying research activity has been done abroad, meaning that the company has internationalized its R&D. The findings suggest that German firms, depending on their industry, mostly conduct research in their home-base, i.e. Germany, followed by R&D activities in select neighboring European countries and the USA