Research Abroad Boosts Employment in Germany

Small and medium-sized enterprises (SMEs) which are maintaining research and development (R&D)activities abroad clearly show an higher employment increase than SMEs restricting R&D to Germany. Thus, SMEs doing research abroad in the year 2005 raised their employment rates by about 10 percent within two years (from end of 2004 to end of 2006).In the same period of time SMEs exclusively doing research in Germany only saw a five percent increase in employment rates. These are the findings of a study conducted by the Centre for European Economic Research (ZEW) in Mannheim. The study is based on the Mannheim Innovation Panel, a representative survey consulting approximately 27,500 firms within Germany’s manufacturing industry as well as the mining and service sector.

The findings show that the widely spread fear of jobs being shed by firms conducting research abroad is largely unfounded. SMEs even prove the contrary. "The external know-how flowing into domestic firms as a result of internationalising R&D can increase the firm’s competitiveness on a general basis and therefore help boost growth impulses in Germany", says Dr. Christian Rammer, ZEW innovation expert.

Furthermore the study clearly shows what kinds of features are important and favourable for SMEs in order to invest in R&D abroad. Many of them showed, for instance, extensive activities in the field of research and development in Germany before going abroad. Enterprises having experienced the conditions on international markets by exporting their goods and services are also more likely to take the risk of starting R&D activities abroad. This is also the case for SMEs being familiar with the protection of their intellectual property on an international level. SMEs specialised on innovative niche markets are particularly open for activities abroad.

For further information please contact

Dr. Christian Rammer, Phone: +49/621/1235-184, E-mail: rammer@zew.de