The Internationalization of Corporate R&D

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THE INTERNATIONALIZATION OF CORPORATE R&DFigure 5-5 Important public-private R&D development blocks in Sweden.DefenceCommuni -cationSAAB – FMVEricsson -FMVSAAB/Volvo AeroTranspor -tationEricsson - TeliaICTAerospaceVolvo/SAABABB - VattenfallEnergyMachineryMotorVolvo/Scania – Forest & steel industryEnergy eq.vehiclesABB – Forest & steel industryPharma -Bio-ceuticalstechnologyRawmaterialsASTRA/Pharmacia – Public health authoritiesHealthWithin the Swedish ICT sector, the major development block has been firmly based onthe relationship between the public company Televerket, later Telia, and Ericsson. TheR&D relationships between Ericsson and the internationally large, Swedish defensesector have also been important in contributing to the Swedish ICT industry R&D(Sörlin & Törnqvist 2000, p. 91).We suggest that there are three important and interrelated Swedish, national economicsystem features that explain the qualified demand for ICT services in Sweden. First, itis a consequence of an internationally broad, high-technology and medium high-technologymanufacturing industry, with high levels of demand for ICT goods and services,in combination with heavy outsourcing of such functions. Second, it is a consequenceof the sizeable, technology-driving demand from the public sector for development ofICT-based public services. Third, Swedish households display strong demand andearly-adopter behavior in relation to ICT technology that fuels continuous upgrading ofICT goods and services.144
THE INTERNATIONALIZATION OF CORPORATE R&DAn important general feature of the Swedish public-private partnerships, includingthose in the ICT industry, is that they have generated high, long-term investments inindustrial R&D. This has been possible largely because of the existence of a publicmonopoly or semi-monopoly procuring agent that has invested with a long-term perspectivein R&D projects in Sweden. Generally speaking, the public procurer has beenvery demanding in terms of technical and functional requirements, which has been animportant driving force for the quality of the R&D and product system design andfunctionality (Marklund et al. 2004).We can, in general terms, conclude that the basis of the Swedish ICT competitivenesswas the result of the evolution of strong user-producer-based development blocks,resulting in qualified demand and good conditions for long-term investments in technologicalexcellence. Because Sweden is a small country, both in population and ingeographical terms, export markets have always been the major source of value generation.Consequentially, the pressure generated by international competition has furtherreinforced the stimulation of continuous technological upgrading of the SwedishICT industry.As a consequence, the Swedish national innovation system has provided access tohighly demanding and ambitiously investing public customers. It has also offered afairly protected home market, primarily due to its small size, as well as open access to alarge global market. Moreover, it has provided geographical proximity and often importanttechnological relationships with other R&D-intensive groups in Sweden, combinedwith relatively easy access to an abundant supply of human talent.It should be noted that the dominance of one (or a few) highly technologically competitivemultinational companies in the ICT industry is not a feature unique to Sweden.As Ericsson in Sweden, Nokia in Finland, Philips in the Netherlands and Samsung inKorea are nationally founded, they are still primarily nationally owned and have longindustrial histories in their respective countries. In fact, the technological performanceof the ICT industry in these countries has a strong basis in public-private partnerships,which have been of key importance in stimulating high, long-term industrial R&Dinvestments.However, in the wake of the globalization processes and the associated deregulation ofthe ICT industries, the “dynamic force” of the dominant Swedish “technological regime”in the ICT industry is eroding. Perhaps somewhat ironically, this process acceleratedat the very height of the ICT boom during the latter half of the 1990s, whenglobal ICT markets boomed and ICT deregulation took place in many countries. As aresult, new foundations need to be sought and developed in order to maintain technologicalperformance (see IVA 2005). These foundations would have to address threegeneral and integrated issues:145
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The Swedish Institute for Growth Po
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