R&D investments in knowledge intensive sectors in developing countries and the role of host country political uncertainty

Multinational enterprises (MNEs) persistently navigate environments characterized by politi-cal uncertainty. Yet, it is unclear how such uncertainty affects the location and sectoral spread of MNEs’ overseas research and development (R&D) investments. This study delves into the influence of political uncertainty on R&D investments within knowledge- intensive sectors, particularly in developing nations, thus enhancing our understanding of the contextual varia-bles at play. Using a unique data set of MNE greenfield R&D global investment projects over the period 2003–2019, we show that political uncertainty has a negative effect on R&D capi-tal investments. Additionally, we explore sector and host country location- specific boundary conditions that moderate this relationship and find support for our hypotheses. Our findings show that MNE R&D investments in science- based sectors (SBS) and knowledge- intensive business services (KIBS) sectors in developing countries are less susceptible to political uncer-tainty compared to developed countries. Our results call for more attention from MNEs’ managers and policymakers to political developments in their investing countries.