The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D3.5.2 Regional R&D ExternalitiesInvestment in offshore R&D will naturally occur where opportunities for exploitingspillovers are highest (Coe & Helpman 1995). This implies seeking proximity to “technologyleaders,” and since companies tend to concentrate strategic R&D activities intheir home location, this high level of competence is often reflected in the associatedsystems of innovation. Thus, asset-seeking activities are often associated with locationsthat exhibit some technological or comparative advantage (see Patel & Vega 1999, LeBas & Sierra 2002).It is worth noting that technology leaders are not always industry leaders. Companies –particularly in technology intensive sectors – increasingly need to have multiple competences(e.g. Granstrand 1998). Even where products are based on a single technology,the processes used to manufacture them often use several technologies. Furthermore,even within a given technology (and particularly in technology-intensive sectors),leadership can change rapidly. Criscuolo, et al. (2005) suggest that this is anotherreason companies may engage in both asset-exploiting and asset-augmenting activitiessimultaneously.3.5.3 Aggolomeration and Urbanization EconomiesFrom a bird’s-eye view, cities are focal points for R&D-oriented FDI. When multinationalcompanies invest in R&D activities abroad, they almost always do so inmetropolitan regions. The conventional explanation for this pattern is that metropolitanregions provide greater choice of knowledge providers, customers and input suppliers.In addition, the opportunities to sustain face-to-face interaction between dispersedR&D facilities are much greater if the different R&D nodes are placed in metropolitanregions, which offer superior infrastructure and interaction facilities.This means that large urban regions across the globe increase their importance asplaces where multinational companies can benefit from intense interaction with specializedknowledge providers and research centers. The same places will also functionas meeting places where multinational companies can exercise interface activities withimportant customers. In essence this means that the world map evolves into a set of“islands” where subsidiaries of multinational companies reside, while at the same timebeing combined into the internal networks of each multinational company.3.6 ConclusionsThe evidence regarding the trends, scope and strategies behind offshore R&D-investmentsis varied, and still limited. Some characteristics are fairly well documented: (1)large multinational companies play a dominant role in the innovation systems of theirhome countries; (2) the same enterprises own a large stock of advanced technologies in98