Abstract This study contributes to the literature on technology sourcing in multi-location R&D by providing novel regional-level evidence on how green knowledge embedded in host locations shapes the green innovation trajectory of global R&D leaders. Using data from 231 top R&D companies with inventive activities dispersed across 118 European regions over the period 2000–2018, we adopt a two-step empirical strategy combining conditional fixed-effects logistic and Poisson models. The results show that higher green innovation intensity in host regions is significantly associated with both the occurrence and count of green patents by R&D units located within them. To address potential endogeneity concerns, we implement a Control Function Approach (CFA), and validate our findings through extensive robustness checks. Heterogeneity analyses indicate that these results hold only when host regions are foreign, located within the European core area, environmentally “brown” and subject to stricter environmental regulation than firms’ home countries. We also find that local knowledge, rather than neighboring regional innovative activity, drives these patterns. Overall, the findings reveal reverse technological externalities from host contexts to corporate R&D units and underscore the importance of local embeddedness in shaping the environmental direction of corporate innovation. Policy implications point to the strategic role of attracting R&D investments to strengthen regional green knowledge bases and cumulative technological capabilities, while managerial implications emphasize the value of leveraging location-specific conditions to foster sustainable innovation.
Calzaretta et al. (Sat,) studied this question.