The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D3.4 Empirical EvidenceThe literature provides conflicting evidence on the relative importance of (1) assetexploitingand (2) asset-seeking R&D activities in countries other than the company’shome country and (3) strategic partnering, respectively.Some survey information indicates that the second aspect above, asset-seeking R&Dactivities in foreign countries, may be growing in importance; see for example Pearce(1999), von Zedtwitz & Gassmann (2002) and ITPS (2005b). In a survey by theSwedish Institute for Growth Policy Studies (ITPS), 42 percent of Swedish-controlledmultinational companies reported that an important reason for offshore R&D investmentswas to carry out demand-related adjustments of existing products and processes.See Figure 3-5. This type of adaptive innovation can also be considered a customizationprocess (Kuemmerle 1999).As Figure 3-5 also shows: 40 percent of Swedish-controlled multinational companiesinvested in offshore R&D related to production of goods; 23 percent wanted greateraccess to global research; and 16 percent wanted to be closer to other innovative companies.Figure 3-5 Main objectives for Swedish multinational companies’ R&D investments abroad.Main ObjectiveShare of the firmsAdaptation of products and processes to customer demands 42%Production-related R&D 40%Access to global research 23%Proximity to other innovative enterprises 16%Note: A company can have more than one objective for offshore R&D investments.Source: ITPS 2005b.According to the ITPS survey, there are a number of structural reasons why Swedishmultinational companies have offshore R&D. The primary reason is organic growth,which accounts for 55 percent of offshore R&D investments. Acquisition of othercompanies accounts for 32 percent. Only 13 percent of offshore R&D expenditures arerelated to direct investment in new or expanded R&D facilities (“greenfield investments”).See Figure 3-6.Figure 3-6 Determinants for offshore R&D investments by Swedish multinational companies.Main factorProportionOrganic growth 55%Acquisition 32%Greenfield investment 13%Source: ITPS 2005b.95