The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DMoving away from the corporate center can be motivated by the need for R&D to beclose to manufacturing, markets or knowledge centers at other geographical locations,sometimes combined with a cost advantage. In addition, companies might considerdeveloping radical, disruptive innovations far from the corporate center.R&D is located close to manufacturing and suppliers to support local production, developproduction processes or to collaborate with local suppliers. Also, co-location ofR&D and manufacturing can promote learning of design for manufacturability and as aresult, decrease cost and time to market.R&D is located close to markets and customers when technologies should be adapted to alocal market or when the company wants to learn from leading customers. Other motivesmight be to participate in local standardization activities, take advantage of tax incentives,avoid trade barriers, or comply with local market-access regulations and pressures.Increasingly, companies are locating R&D close to “centers of excellence” to accessknowledge and skilled research personnel. Sometimes these centers take the form oftechnology clusters specializing in a particular technology or discipline. By participatingin these clusters, companies can keep abreast of new technologies and take advantageof technologies developed by other companies. Some companies are lookingfor skilled researchers and engineers in large numbers and must locate R&D activitiesin centers with a considerable supply of technical students.One geographical location, in the home or a foreign country, might combine two ormore of the functions and related motives.There are several attempts in the literature to identify different types of R&D unitsbased on their function or motives behind their realization (see Chapter 3). Two maintypes are used by most analysts: adaptive R&D, to adapt technologies, products andprocesses to local conditions in the host country, and innovative R&D, to create newtechnologies, products and processes for local, regional or global markets. AdaptiveR&D is dominating but innovative R&D is increasing as a result of specialization andinternationalization, according to a number of studies.Ease of access to technologies and to skilled scientists and engineers is becoming anincreasingly important driver for R&D localization. This is true especially in technologicalareas closely linked to basic research, such as in the biotechnology and pharmaceuticalsectors. Support for manufacturing and adaptation to local market conditionsare more important in the chemical and automotive sectors.79