The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DThe location of a certain R&D facility within a company’s value network thus dependson the type and purpose of the R&D activities performed. The main forms of localizationlinkages include: proximity to a production facility, proximity to a particular market,proximity to a center of research and innovation activities, or a combination of twoor all three factors. The driving forces behind the localization of R&D are discussed inmore detail below.2.1.2 The Structure of Corporate R&DMultinational companies are the leading players in the global R&D landscape. They aredriving R&D spending and the internationalization process with a significant impact onthe economies of both home and host countries. OECD countries are increasingly relyingon the creation and utilization of science and technology to enhance growth andproductivity. High-technology industries account for an increasing share of added valueand international trade in the economy and are expected to play an important role instrengthening national competitiveness (see for example OECD 2004).Corporate R&D spending can be discussed and measured from at least two perspectives:data on business sector R&D expenditures per country and its share of total R&Dspending in that country, and data on R&D expenditure as reported by the companiesand an analysis of different industry sectors.In most OECD countries, the business sector is dominating R&D expenditures. Theindustry share of the total R&D enterprise has increased rapidly during the last twodecades. R&D performed by industry in OECD countries reached about 458 billiondollars in 2003 (up from 262 billion dollars in 1991), or 67 percent of total R&D expenditures.A few countries, such as Sweden, Korea and Japan, have a significantlyhigher share of industry R&D of around 75 percent. Sweden also stands out as a countryof high industry R&D expenditure as a percentage of GDP (about 3 percent in2003), together with Israel, Finland and Japan (MSTI 2005, Figure 2-2).Not surprisingly, the U.S. is dominating in the world of corporate R&D. In 2003, theU.S. business sector spent 196 billion dollars on R&D, followed by EU-25 (134 billiondollars) and Japan (85 billion dollars). Chinese business enterprise expenditure onR&D is closing in (53 billion dollars) and is ahead of countries like Germany, Franceand the U.K. [MSTI 2005, all data in current PPP (purchasing power parity) dollars]. In2003, companies in Sweden spent 9 billion dollars (72 billion SEK), a doubling since1991 (SCB 2005).57