Using firm-level data from the third Community Innovation Survey, the paper investigates effects of foreign ownership on research and development (R&D) activity carried out by innovative firms in the Czech Republic.
It is shown that foreign affiliates tend to engage less in internal R&D compared with domestic-owned firms. The finding is sustained after controlling for a number of other firm, industry and region-specific factors and across different specifications of the model. Only external acquisition of R&D from labs and universities in the host country appears to be complementary to internal R&D activity in foreign affiliates, while sourcing of R&D from abroad is not.