Owing to interactions between the accelerating pace of technological progress and globalization, capacity for innovation is becoming a key competitive factor in more and more sectors.

This 'Note' explores the relationship between the spread of competition-based innovation and the internationalization of corporate R&D activities. It suggests that the internationalization of R&D is not only pulled by the extension of multinationals' production operations, but also pushed by the need for access to knowledge generated abroad.

In this connection, regions on the cutting edge of innovation and scientific research represent the most appealing group. The second part analyzes the behavior of European frims through the various channels for the internationalization of R&D: siting of labs abroad, M&As, and cooperation agreements.

The analysis is rounded out by a look at the geographical origin of the patents registered by both parent companies and subsidiaries. The various indicators suggest that European firms prefer the US for sourcing cutting-edge technologies, particularly in the fields driving the 'new economy'.

The conclusion examines the impact of these findings for European innovation policies.