The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DFramework for the AnalysisThe process of R&D internationalization is analyzed in two interconnected, basic dimensions:companies and countries. On the one hand, multinational companies are theprincipal drivers of the process, as they seek to optimize their economic and innovativeperformance by combining and managing different geographical R&D locations acrossseveral countries. On the other hand, countries seek to maximize economic and innovativeactivities within their borders by implementing policies that attract R&D and“downstream” business activities that generate tax revenues and employment. In termsof R&D investment, a given country is both a host for foreign R&D facilities and ahome for companies with R&D abroad.As a general framework for the analysis, a simple model for understanding the internationalizationprocess is used. The model includes four different levels of analysis (see Figure 1-1).Figure 1-1 An illustrative model of the process of R&D internationalization at company,global, country and policy level with Sweden as an example.Sw edishPolicy inconditions forSwedenbusiness andR&DPolicy, business & R&Dconditions in othercountries4CorporatestrategiesInternationalImplications& businessflows &at countrydecisionsredistributionlevel forof R&DSwedencapabilities1 2 3Source: ITPS.First, corporate strategies and business decisions involving R&D activities are theprime movers of the internationalization process (company level). Matters of R&Dlocalization may be part of broader strategic decisions, involving production, marketingas well as mergers and acquisitions. Second, these decisions result in internationalflows and a redistribution of R&D capabilities, such as capital, talent andknowledge. Third, the flows have an impact on national innovation systems (countrylevel), for example on employment, innovative capabilities and national value creation.Finally, national policies, as part of the general business and R&D conditions in acountry, are influencing the decision-making process of companies. Strategic decisionsregarding R&D localization are influenced by factors such as the configuration of local33