The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DU.S. (30 to 40 percent of responding companies). In the survey by the EconomistIntelligence Unit, 3 percent of companies mentioned Sweden as their preferredcountry (UNCTAD 2005a, EIU 2004b).This investment pattern was also confirmed in a survey by the Corporate ExecutiveBoard in 2004. Over 90 percent of responding companies would increase both researchand development in China in the next five years. India and Eastern Europe followedalbeit with a focus on development investment (76 and 58 percent of the companiesrespectively) (CEB 2004b).2.4 Explaining Internationalization of Corporate R&D2.4.1 Enablers of R&D InternationalizationUnderlying the internationalization of corporate R&D is a number of enabling forces that haveemerged during the past 10 to 15 years. On a systemic level, these forces made possible andpromoted the tradability and cross-border mobility of R&D activities and services (see forexample RAND 2000, Mann 2005, Ruetsche 2005 and BusinessWeek 2006).First, the rapid development of a global information and communication infrastructurehas enabled the internationalization of R&D investment, trade and exchange. Internetcombined with international telecommunications networks and the penetration of personalcomputers has drastically reduced the cost of communication and facilitated globalwork sharing, flexible networking and communication among geographically scatteredcenters of competence.Second, distributed innovation is also facilitated by the use of digitization and standardizedtools. Global standards for digital documents, multimedia information, operating systemsand other software are enabling internationalized R&D. Certain R&D activities can bemodularized and performed using computer-aided expert systems and simulation tools.Partial designs and solutions from several locations can, for example, be integrated rapidlyand electronically.Third, the overall production process is becoming increasingly distributed amongmany multinational companies. The fragmentation of the production process meansthat tasks, including manufacturing and R&D, are separated from other businessactivities and can be performed in remote locations. Technology is becoming moremodularized in industry sectors such as microelectronics, biotechnology and software.R&D can follow more easily when manufacturing moves abroad.Fourth, more countries are actively building scientific capabilities and are participatingin the global R&D community. Developing countries, such as China andIndia, have developed their innovation systems and rapidly improved host countryenvironments.76