The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DICT industry have been made in the largest developed economies in the world: theU.S., Japan, U.K., Germany and France. However in recent years, large investments inChina and India have brought these countries to second and sixth place, respectively interms of total volumes of ICT-related R&D investments. And, as discussed elsewherein this report, the R&D investments and innovation initiatives are rapidly increasing inChina and India, which will strongly influence global technological competition withinthe ICT industry.At the company level, there has been a simultaneous development toward increasingR&D investments while decreasing the percentage of those investments allocated to inhouseresearch. Therefore, we see growing dependence on external sourcing of technologiesand innovations; recent decades have witnessed rapid increase in the outsourcingof R&D activities, although outsourced R&D still represents a small share oftotal R&D investments. Consequently, there are strong trends towards restructuring theorganizational R&D regimes of several industries, including the ICT industry.A related trend exists in the decreasing share of business R&D directed to more basic,in-house research activities; many companies have sought external sources of basicscientific competence. While the primary force behind private investments in R&D iscompany competitiveness and profits, corporate R&D tends to focus mainly on developmentactivities close to commercialization and production. And, due to rapid technologicaldevelopment, increasing technological complexity and increasing competition,(all highly related to globalization), this tendency seems to have strengthenedduring recent decades.A parallel development is the increasing need for many technologies and industries,including ICT, to address fundamental scientific challenges. Academic or semi-academicresearch is generally more important to generating science capabilities and competencesthan is corporate R&D. And, as the science base of most technologies andinnovations (including those in the ICT industry) has tended to increase, the importanceof research to technological capabilities and innovation has increased. Therefore, thereis a growing need to tap into scientific research in order to stay industrially competitive.Companies place more strategic importance on investments in research relationshipswith academic and semi-academic institutions to access critical research competence.This is also the case in the ICT industry, where investments in academic researchrelationships have become an increasingly important driving force for patterns of geographicallocations and flows of corporate R&D and R&D financing.A country’s long-term technological performance is strongly connected to the capabilitiesof the national research system, as nations face the increasing mobility of industrial productionand R&D, in combination with increased importance of the science base fortechnological development. Technological capabilities are thus associated with the scien-136