The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D...as well as company strategies to be close to production, markets andknowledge,...Foreign R&D is becoming increasingly integrated into the overall R&D strategies ofmultinational companies. In a more rational approach, companies are strategicallyestablishing or re-locating R&D activities to be close to production facilities, leadingmarkets and centers of front-line research and innovation, with access to skilled personnel,on a global scale. Localization decisions are based on cost-benefit analyses,which take into consideration the cost and coordination difficulties as well as otherpossible constraints for a particular R&D activity.As production becomes more and more international, companies in some sectorsdecide to move or establish certain R&D activities close to manufacturing facilities.This might be a driver for foreign R&D in the communications and automotive sector,but less so for pharmaceuticals.For multinational companies it is also important to have certain types of R&D incountries with specific regulatory conditions (i.e. pharmaceuticals), to adapt productsto local market conditions (i.e. software), to participate in standardization processes(i.e. communications equipment) or to launch new products and services on leadingmarkets with advanced users (i.e. information technology services).With increasing competitive pressure, cost and complexity of technological developments,companies are also searching globally for new technologies, leading-edgeknowledge and skilled researchers and engineers. In Japan, for example, the agingpopulation – and the resulting lack of skilled researchers and engineers – drivesJapanese multinational companies to seek foreign locations for R&D....and is facilitated by technology, people and new actors.An important enabler for any type of geographically distributed collaboration,including R&D, has been the development of global information and communicationsnetworks. Researchers and engineers at different locations can work aroundthe clock as one integrated and global “virtual” team.Another factor stimulating the internationalization of corporate R&D is the presenceof large groups of highly-skilled and motivated immigrants in certain technologyintensiveregions in the world. Immigrants from India and China, for example, areimportant players in the internationalization of the Silicon Valley region.New intermediary players, most of them U.S.-based, are emerging on the globalR&D market. Their business idea is to help companies solve specific problems andfind technologies by employing their networks with global reach.14