The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DAccording to a study by ITPS, the main objective for Swedish-owned multinationalcompanies to perform R&D abroad is to adapt products to specific customer demands(ITPS 2005a, also see Chapter 3). In the survey, 80 percent of the companies answeredeither that “adaptation of products and processes to customer demands” or “productionrelated R&D” were the main drivers behind R&D-investments abroad in 2003.The Research Institute of Industrial Economics has also surveyed Swedish multinationalcompanies (Hakkala & Zimmermann 2005). Their results are similar to thefindings by ITPS showing that the share of R&D conducted abroad has increased. Theshare of R&D conducted outside of Sweden has increased from between 15–25 percentin the 1990s to almost 40 percent in 2003.Data from Statistics Sweden (SCB) also suggests an increased share of foreign R&D(SCB 2004). If we examine R&D abroad that is funded by companies in Sweden, wefind an increasing amount of R&D payments being spent abroad. About 1.5 billiondollars was used to fund R&D labs abroad in 2003. Behind the increased R&D fundingabroad is the different investment pattern employed by the multinational companies inthe Swedish telecommunications products sector.4.5 Where Do Swedish Multinational Companies EmployR&D Personnel?This section is based on data collected by ITPS covering Swedish-owned multinationalcompanies (ITPS 2005a). ITPS collected the employment data and R&D personnel 14data of 20 Swedish-owned enterprise groups from 1995 to 2003. In 2003, these groupsaccounted for almost 40 percent of the total corporate R&D expenditure in Sweden.The data can be divided into the three sub-regions: 1) Sweden, 2) high income OECDcountries 15 (except Sweden) and 3) non-OECD countries.14 R&D personnel are defined as R&D person years.15 In this chapter, “High income OECD” is defined according to the definition used by the World Bank,which includes 24 countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,Greece, Ireland, Iceland, Italy, Japan, South Korea, Luxembourg, the Netherlands, New Zealand, Norway,Portugal, Spain, (Sweden), Switzerland, the United Kingdom and the United States. Non-OECD is defined asthe rest of the world.118