R&D Location Choice under Technology Sanctions: Evidence from Chinese MNEs

Drawing on the multipolar geo-strategy perspective and the connector country concept, this study examines how U.S. technology sanctions alter the logic of Chinese MNEs’ overseas R&D location choices. We develop and test three hypotheses—the triangular offset, regulatory arbitrage, and political leveraging effects—capturing how bilateral political relationships, host country governance quality, and board-level political connections shape R&D subsidiary establishment under sanctions. Using a difference-in-differences analysis with 141,440 firm-year-country observations across 64 host countries from 2014 to 2023, and leveraging U.S. Entity List designations as exogenous shocks, we find that sanction-exposed MNEs preferentially established new R&D subsidiaries in connector countries—combining geopolitical agility with geo-economic gateway functions. These findings reveal that technology sanctions invert the conventional logic through which established location factors are evaluated: the governance quality of host countries transforms from an attraction into a liability, and political distance from the sanctioning power emerges as an important location criterion.