The aim of the paper is, firstly, to identify a number of strategies Swiss firms pursue by performing foreign R&D, expecting
that firms, in many instances, are driven by a combination of several motives ("mixed strategies"). Secondly, we ask whether
foreign and domestic R&D are substitutes or complements. Thirdly, we draw some policy conclusions based on results for direct
and indirect home-country effects of foreign R&D. By applying cluster analysis, we identified four specific patterns of motives
of foreign R&D. In a second step, we investigated whether these clusters effectively may be interpreted as specific types
of R&D strategies. To this end, the clusters were characterised in terms of a large number of variables, which, according
to the OLI paradigm of FDI, determine foreign R&D. We found that the patterns of the four clusters systematically differ with
respect to these theory-related variables. Some clusters represent, in terms of motives, broad-based mixed strategies, whereas
others are strongly focused. It turns out that foreign R&D strategies that primarily aim at exploiting capabilities of the
domestic headquarters dominate, whereas cost-reducing strategies are of very minor importance. In case of the other two strategies
knowledge sourcing is a constituent element, in the first one, knowledge sourcing is at the core, in the second case it is
an important element in the frame of a broad-based strategy. The relative importance of the four strategies implies that,
on balance, foreign and domestic R&D are complements. Notwithstanding this positive result, it is sensible to take policy
actions supporting the economy to capitalise even more on outward FDI in R&D. Policy basically should aim at securing the
attractiveness of Switzerland as a location for R&D-intensive headquarters of firms performing foreign R&D, and at enhancing
knowledge spill-overs from headquarter companies to other domestic firms. The five categories of measures we recommend are
part of a framework-oriented policy design rather than of a more interventionist concept.
