The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D8 Silicon Valley: the Global R&D Hub?Helena Jonsson Franchi8.1 IntroductionLocated in northern California, the Silicon Valley region is home to a large number ofcompanies in the high-technology sectors of information technology, biotechnologyand nanotechnology. To a great extent, these companies depend on successful researchand development (R&D) for survival and to keep their competitive edge.This region has been chosen as a case study for this chapter because it is considered tobe one of the most dynamic and innovative high-technology regions in the world, andbecause it has consistently shown an ability to adjust rapidly to changes in the marketplace,while keeping its position as a leader of innovation and entrepreneurship. As themost R&D-intensive region in the U.S., Silicon Valley arguably has responded to theinternationalization of corporate R&D in ways that could be of interest to other hightechnologyregions.The purpose of this study is to examine the phenomenon of internationally distributedR&D, including offshoring, and identify new trends in Silicon Valley. The focus is onSilicon Valley companies establishing R&D activities in other countries and will notcover foreign R&D establishments in Silicon Valley.Key questions:• Has Silicon Valley been affected by internationalization, especially of corporate R&D?• What are the driving forces behind this development?• What are the impacts and effects of this development?• What is the response from policymakers and others?• What does the future of the region look like?• What are the potential implications and findings of importance for Sweden?This chapter is based on a review of the major findings from the most recent research,studies and media reporting, as well as interviews with researchers, think-tanks, venturecapital firms, and small and large companies in Silicon Valley. Because of thecomplex nature of measuring the international distribution of R&D activities, there areno comprehensive data available showing the extent of corporate R&D moving orbeing established abroad from Silicon Valley, or even from the state of California. Insome parts, the term “Bay Area” will be used instead of Silicon Valley. The Bay Areais a region encompassing Silicon Valley and other areas in close proximity.185