Another look at cultural and institutional determinants of R&D investment: an international study

We conduct mean comparison tests and regression analyses on a sample of 65 countries to explore the structural and cultural determinants of national R&D investment. We find a legal effect whereby structural drivers are effective only under a strong rule oflaw. Cultural openness and long-term orientation also show positive associations with R&D investment. While innovation efficiency attracts foreign R&D, innovation efficacy deters it, as profitable opportunities are usually exploited by domestic investors.Moreover, we identify a substitution effect in which governments offset insufficient domestic and foreign investment. Our findings have policy relevance, as we highlight underexplored enhancers of R&D beyond the usual financial or cost-related factors, providing new insights for designing more effective innovation and research strategies.