The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D5.3 Technological DevelopmentsInnovation is essential to a company’s competitiveness. R&D investments are criticalto developing technological capabilities and innovating. 6 As the ICT industry is heavilybased on technological development, R&D investments have been – and continue to be– vital to company competitiveness, as well as to national innovation and economiccompetitiveness in the ICT industry.In this section we address the development of Swedish technological performance interms of R&D investments and patenting. Patenting admittedly represents a limitedcomponent of technological performance. In fact, because it mirrors invention, it is nota measure of economic value generating innovation.Inventions, in a broad sense, are ideas and results with potential for commercializationand exploitation for different kinds of production. Innovation refers to the introductionof inventions in practical and economic value generating use, such as goods, services orproduction processes. Business-sector R&D represents key investment in inventionsand innovation capabilities.Although patenting is not a good technological-performance indicator in all industries,it is an important vehicle in the innovation processes of certain industries, such as ICTmanufacturing. It is also closely related to R&D investments. Therefore, there is strongreason to believe that ICT patenting is one of the important indicators of technologicalcapabilities related to ICT manufacturing.5.3.1 Global PatternsSeveral co-evolving trends are important to determining the conditions and challengesfor national technological performance. Here, we will consider two major trends. Thefirst trend relates to global developments in technological investments. The secondtrend relates to general developments in the industrial organization of R&D investments.Both trends, and particularly in combination, have important effects on the natureand dynamics of geographic distribution of technological capabilities within theICT industry.The technological requirements for smaller countries, such as Sweden, are highly determinedby the different and combined trends in the development of ICT R&D investmentswithin the five, major techno-economic regions: the U.S., the European Union,Japan, China and India. Historically, the largest volumes of R&D investment in the6 It should be noted that, as the R&D concept is generally understood in surveys and in regular annualreporting, R&D is not of equal importance for innovation processes across different industries. Particularlyservice companies, also within the ICT industry, have traditionally reported considerably smaller shares oftheir innovation activities as R&D.135