The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Dof other countries to provide quality services and manufacturing are also importantfactors. Other drivers for internationalizing R&D are the fact that R&D has become anincreasingly multidisciplinary and costly process over the years. For many companies,establishing R&D abroad also provides access to and knowledge about major emergingmarkets. This shift in focus has led to a changed business model, where companiesdraw on global pools of talented individuals, technologies and capital, reducing costsand increasing efficiency though outsourcing and offshoring (JVSV 2005). Many newcompanies no longer consider themselves to “Silicon Valley companies,” but think ofthemselves as “global companies.”In order to reduce costs for startup companies, Silicon Valley venture capital firms areencouraging them to send production development work overseas, meaning that thesecompanies become multinational more or less from the start (BJSA 2004, interviews).According to an article in Computerworld, most startup companies are as keen onlower wages as on talent as a reason for offshoring, even though the major companyGoogle was more explicit about the latter (Lemon & Thibodeau 2004).Venture capital firms are also extending their activities abroad. For example, the wellknownventure capital firm Draper Fisher Jurvetson has partnered with 17 companiesacross five contents giving Draper access to a globally diversified deal flow. Drapercalls this its “affiliated network.” This trend indicates that venture capital flows intohigh-technology startups now have gone trans-national (Red Herring 2006).8.3.4 The Power of ImmigrantsThe large Asian population in California plays an important role in forming strong connectionsbetween California and Asia, especially with emerging economies like China andIndia. This fact is especially evident in Silicon Valley.According to AnnaLee Saxenian, tens of thousands of immigrants from developing countriescame to the U.S. in the late 1970’s for graduate engineering education and decided tostay in Silicon Valley to work. In 2000, more than half (53 percent) of the scientists andengineers in Silicon Valley were foreign-born, with immigrants from India and China accountingfor more than one quarter of all scientists and engineers (Saxenian 2005).Saxenian argues that the same individuals who once left their home countries for a betterlifestyle are now returning, reversing the “brain drain” and transforming it into “brain circulation”while maintaining social and professional ties to the U.S. The return of theseindividuals prompts knowledge-transfer from the U.S. to their home countries (Saxenian2005). These ties have also proven to have measurable economic benefits. Researchersfrom the University of California-Berkeley argue that “for every one percent increase in thenumber of first-generation immigrants from a given country, exports from California havegone up nearly 0.5 percent” (Bardhan & Howe 1998).191