The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DEconomic reforms, training of scientists and engineers, development of R&D clustersand technical infrastructure, strengthening of supplier networks and targeted policiesto attract foreign investment in these countries have broadened and leveled the globalR&D playing-field.Finally, intensified cross-border science and technology activities in general, such as increasingmobility of scientists and engineers, a larger share of research projects involvingparticipants from more than one country and the shift towards more institutionalized, routinizedand systematic processes of internationalization, act as enablers for the internationalizationof corporate R&D.2.4.2 Drivers of R&D InternationalizationDecisions of large, technology-intensive multinational companies are the main drivingforces behind R&D internationalization. Companies decide to go abroad for knowledge,research and technologies for several reasons, including the motives of implementingdistributed innovation discussed above. Increased technological complexity ofproducts and services and increased global competition from more differentiated productsand producers are making technology a key factor for competitiveness. Companiesare actively building international R&D networks, in-house and with partners, to sharethe costs and risks involved in R&D, to exploit research synergies, reduce duplicationand to innovate faster and more efficiently. The growing similarities among technologiesacross industrial sectors and the cross-fertilization of technologies that is occurringbetween sectors can also be seen as drivers.Companies are exploring new organizational strategies to manage their R&D networks.The challenge includes enabling effective collaboration between external and internationalR&D teams, managing people in diverse cultural environments and aligningglobal research activities with business strategy. Some companies have managed tocreate an integrated “innovation chain” that is truly global – a process for innovatingthat transcends local clusters and national boundaries (Santos et al. 2004, EIU 2004b).Company decisions also drive cross-border control and ownership of corporate R&D.The degree and structure of inward and outward R&D investment can be explained intwo principal ways.First, the internationalization pattern is partly a result of corporate activities that are notprimarily focused on R&D facilities and innovation. For example, the main driverbehind a large international merger or acquisition may be to gain market shares or toeliminate a competitor, rather than acquire R&D capabilities. In this way, foreigncontrolledR&D may be an unintended outcome of corporate decisions with other primarygoals. A single, large international merger or acquisition can lead to sharp increasesin ownership ratios (see for example McGuckin et al. 2004, Patel 2004).77