Globalization of Corporate R

1
Globalization of Corporate RD - actor network 1

• Actors - transnational corporations (TNCs), home
  and host countries.
• Degree of globalization - depends on the type and
  cost of complementary knowledge available.
• Degree of integration - the greater the degree of
  complementary knowledge available in a host
  country, the greater the integration.
• The greater the degree of complementarity between
  home country and host country, the greater will
  be the degrees of globalization and integration
  (Reddy, 2000).

2
Globalization of RD - actor network (Reddy,
2000)
Transnational Corporation
degree of globalization
degree of integration
RD
Home Country
Host Country
degree of complementarity
3
Category of RD units

• Technology transfer units (TTUs) - to facilitate
  transfer of parents technology to affiliate and
  local technical services
• Indigenous technology units (ITUs) - to develop
  new products for the local markets, drawing on
  local technology
• Global technology units (GTUs) - to develop new
  products and processes for major world markets
• Corporate technology units (CTUs) - to generate
  basic technology of a long term nature for
  corporate use (Ronstadt, 1977)
• Regional technology units (RTU) - to develop
  products for the regional markets (Reddy and
  Sigurdson, 1994).

4
Corporate RD - prior to the 1960s

• Home Country-based RD
• Demand side forces
• - need for coordination between manufacturing,
  RD, finance marketing,
• - RD scale economies.
• Supply-side forces
• - sophisticated and advanced home markets,
• - technologically advanced home economies.
• (Reddy, 2000)

5
Corporate RD in the 1960s

• Demand side forces
• need for coordination between manufacturing, RD,
  finance marketing
• RD scale economies

-
Supply side forces -sophisticated advanced
home markets -technologically advanced home
economies












Corporate RD in Home Countries
6
Evolution of Globalization of RD - 1960s

• The beginnings of internationalization of RD -
  first wave TTUs
• (adaptation RD) -
• Demand side forces
• - need to tap markets abroad,
• - technology transfer for cost effective
  production.
• Supply-side forces
• - large local markets,
• - proximity to production facilities.
• Category of industries - mechanical, electrical,
  and engineering, including
• automobiles.
• Host country effects products and processes
  better suited to local conditions,
• Technical training of local staff.
• (Reddy, 2000)

7
Evolution of Globalization of RD - 1970s

• The growth of internationalization of RD -
  second wave ITUs
• Demand side forces
• - to enhance market share in local markets
  abroad,
• - need to understand sensitivity of local
  consumer,
• - host country government policies.
• Supply-side forces
• - large and protected markets with unique
  characteristics,
• - proximity to market and production.
• Category of Industries - branded packaged
  consumer goods, chemicals
• and allied products.
• Host country effects products better suited to
  local needs and tastes, better use of
• local materials, potential links to local
  innovation system.

8




Demand -side forces -need for tapping markets
abroad -technology transfer abroad for cost
-effective production
Supply -side forces -large local
markets -proximity to production facilities







-
-





















Host country effects -products processes
better suited to local conditions -technical
training of local staff






Corporate RD











Internationalization of production RD to adapt
products and processes to local conditions (TTU)






















Demand -side forces -to enhance market share in
local market abroad -host governments policies
Supply -side forces -large and protected markets
with unique characteristics -proximity to market
production

























Host country effects -products better suited to
local needs and tastes -better use of local
materials -potential linkages to local ST system




Internationalization of RD to develop products
exclusively for the local market abroad (ITU)

























9
Evolution of Globalization of RD - 1980s (1)

• External forces in the business environment
• - liberalization of economies worldwide,
• - homogenization of consumer preferences
  worldwide,
• - emergence of regional markets,
• - increasing global competition,
• - science-base of new technologies and
  multidisciplinary innovations.
• Internal forces
• - rationalization of TNCs operations, leading
  to specialization of affiliates,
• - world and regional product mandates for
  affiliates

10
Evolution of Globalization of RD - 1980s (2)

• From internationalization to globalization of
  RD - third wave GTUs/RTUs/CTUs
• Demand side forces
• - need for monitoring and learning the new
  trends worldwide,
• - need for multi-sourcing of technology inputs.
• Supply-side forces
• - improved information and communication
  technologies,
• - flexibility of new technologies allows
  de-linking of manufacturing RD,
• - comparative advantages of host countries.
• Category of Industries - microelectronics,
  pharmaceuticals, biotechnology and
• new materials.
• Host country effects strong links with local
  innovation system widening its
• capabilities, international specialization of ST
  capabilities.
• (Reddy, 2000)

11
Globalization of Corporate RD Since the 1980s
External forces in business environment
Supply-side forces
- improved information and communication
technologies
- liberalization of economies worldwide
- homogenization of consumer preferences worldwide

- flexibility of new technologies that
allows delinking of manufacturing and RD
- emergence of regional markets
- increasing global competition
- comparative advantages of host
- science-base of new technologies
countries
Demand-side forces
Internal forces
- need for monitoring learning the new trends
worldwide
- rationalization of TNCs' operations
leading to specialization of affiliates
- need for multi-sourcing of technology inputs
Globalization of RD into industrialized
countries to develop products for the
regional/global markets and to carry out
research in generic technologies (RTU/GTU and
CTU)
12
Evolution of Globalization of RD - 1990s

• Evolving patterns globalization of RD - fourth
  wave GTUs/RTUs/CTUs (location of RD
• outside the industrialized world)
• Demand side forces
• - shortage of RD personnel in industrialized
  world,
• - increasing demand for RD personnel,
• - increasing RD costs.
• Supply-side forces
• - availability of RD personnel in some
  developing countries,
• - low-level of wages of personnel,
• - divisibility of RD into core and non-core
  activities,
• - changes in policy regimes, including
  intellectual property rights in host countries.
• Category of Industries - microelectronics,
  pharmaceuticals, biotechnology and new
• materials.
• Host country effects diffusion of knowledge into
  local innovation system through strong
• links with TNCs global RD network, inculcation
  of commercial culture among scientists,
• technology transfer and emergence of spin-off
  firms.

13
Globalization of Corporate RD Since the 1990s
Globalization of RD into industrialized
countries to develop products for the
regional/global markets and to carry out research
in generic technologies (RTU/GTU and CTU)
Demand-side forces -shortage of RD personnel in
industrialized countries -increasing demand for
RD personnel -increasing RD costs
Host country effects -strong linkages with the
local ST system widening its capabilities -intern
ational specialization of ST capabilities
Supply-side forces -Availability of RD
personnel in some developing countries -low-level
of wages of personnel -divisibility of RD into
core non-core activities -changes in policy
regimes, including IPR, in host countries
Globalization of some of the RTU/GTU and CTU
types of RD into some developing countries
Host country effects -diffusion of knowledge
into local ST system through strong linkages
with TNCs global RD network -inculcation of
commercial culture among the scientific
community -technology transfer and emergence of
spin-off firms