The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Dtheir home countries; (3) these companies have not internationalized their innovativeactivities in the same way as with their production activities; (4) the relatively lowerdegree of internationalization is explained by the complex nature of innovation and innovationsystems as well as the embeddedness of R&D activities in the home environment;and (5) offshore R&D is mostly production-supportive and associated with internationalexploitation of technology produced on national basis (adaptive R&D).An increasing number of studies, however, suggest that the process of innovation hasbecome more globalized during the past two decades. Competitive advantage, especiallyin advanced technologies, no longer resides in any single cluster, region or country,but in many. This diffusion is the result of several overlapping factors:• The increasing costs and complexity of technological development, which lead to agrowing need to expand technology sourcing and interaction with different, geographicallydispersed actors who bring complementary knowledge.• The faster pace of innovation activities in a number of industries, which spurcompanies to search for application opportunities that are mainly location-specific.• Existing innovation systems often have systematic and self-reinforcing lock-incharacteristics, which change very gradually and constitute their technologicalspecialization. In new and rapidly evolving industry sectors or areas, national innovationsystems evolve more slowly, in general, than the technological needs ofcompanies. As a result, companies may seek required technology abroad throughoffshore R&D investments (e.g. acquisitions, greenfield investments or strategiccollaboration).Current literature generally agrees that conditions in the home country are still importantin the creation of global technological advantage even for the most internationalizedcompanies; often their technological advantages primarily reflect those of innovationsystems of the home country. Therefore it becomes important to improve ourunderstanding of the reasons companies producing for the world market continuekeeping proportionally larger parts of their R&D activities close to their home base.New findings indicate that investment in offshore R&D has risen considerably over thelast decades, and that companies invest in R&D in order to exploit or augment theirexisting knowledge base. Exploiting knowledge leads to R&D engagements that areclose to existing production facilities and markets, while augmenting knowledge ismore closely associated with establishments close to companies, clusters and universitiesthat have a global technology leadership. It is important to keep in mind that thisis a two-way phenomenon for the individual country.99