The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Dbilities. More often, the objective is broader, targeting larger market shares, economiesof scale in production, or expanding brand portfolios (Johansson & Lööf).It is important to point out that the extent of R&D internationalization is not only, ornot even mainly, the result of strategic and rational decision-making by companiesseeking to optimize external innovation networks. History and organic growth are importantfactors explaining the development and configuration of corporate R&D networks(Nilsson).Other non-strategic drivers for foreign R&D are various forms of government requirements,for example as a condition for market access in a particular country. However, inChina there are some signs that this driver might become less important over time. In thefuture, companies are less likely to establish R&D centers in China as a result of governmentrequirements, but because they want to have access to skilled researchers and engineers,and be close to the strategically important Chinese market (Schwaag Serger)....as well as corporate 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 (Nilsson).As production becomes more and more international, companies in some sectors decideto move or establish certain R&D activities close to manufacturing facilities. Thismight be a driver for foreign R&D in the communications and automotive sector, butless so for pharmaceuticals. In China, for example, proximity to production is an importantdriver for foreign R&D (Nilsson, Schwaag Serger).For multinational companies it is also important to have certain types of R&D in countrieswith specific regulatory conditions (i.e. pharmaceuticals), to adapt products tolocal market conditions (i.e. software), to participate in standardization processes (i.e.communications equipment) or to launch new products and services on leading marketswith 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. For example, increased complexityin the science of medical innovations drives pharmaceutical companies to locate researchfacilities close to centers of excellence around the world that offer a supply of310