CHALLENGES AND OPPORTUNITIES FROM THE INTERNATIONALISATION OF INNOVATION: IS THERE SOME LEARNING FROM INTERMEDIATE COUNTRIES? José Molero Universidad Complutense de Madrid and Innovation Studies Institute (ISIS) ENEF Conference 2013

SCHEME Perspectives of the internationalisation of innovation: concepts and view The double “I” interaction Factors in the inducement of internationalisation The levels International data Spain as an intermediate country The concept of intermediate: a view to the Spanish IS Spain in the process of internationalisation Results from new research on MNEs collaboration Guidelines for policy actions Framework for policies The necessary circular cumulative scheme ENEF Conference 2013

I OLD AND NEW PROPESCTS OF I&I Double I interaction: Increasing and increasingly complex economic internationalisation: More countries and regions (Emerging economies) More actors (new and old MNES) More activities (services, teaching, research, etc) Increasingly complex, costly and pervasive innovation. Cross fertilisation among sources of knowledge A quicker implantation of pervasive technologies Rapid obsolescence of technologies (costly amortisation) Role of tacit (sticky) knowledge (need to get it differently) The management of this process demands new organisational structures, both at micro level (firms) and public policies) The control of firms does not disappear, but changes its nature The role of knowledge and technology integrations is reinforced versus the traditional role of producing technologies Open innovation ENEF Conference 2013

I OLD AND NEW PROPESCTS OF I&I Hierarchies and asymmetric positions Different levels of internationalisation: the classic three levels of Archibugi and Michie). Few countries and agents are very active in the three, most have presence in exploitation Inward and outward processes: “Passive” versus “active” internationalisation. Laggard countries more active in “passive” internationalisation and in the production of knowledge and HC formation than in the economic exploitation of technologies. Could we define a new centre periphery model, but know referred to the inability of laggard economies to hold the fruits of new knowledge? ENEF Conference 2013

I. NEW PERSPECTIVES IN THE ANALYSIS OF MNEs INNOVATION AND NIS New factors in the sitting: interaction between internal and external networks (Cantwell, 2009) The growing importance of reverse spillovers The tendency for a less hierarchical structure has found some important limitations (Narula and Criscuolo) The situation is dynamic along the time (Pearce) The non existence of a model: the taxonomic analysis is very helpful HBA-HBE: Asset versus market seeking strategies ENEF Conference 2013

I INNOVATION AND COOPERATION WITH NIS The growing importance of subsidiaries The integration with NIS is not always present; networking is a possibility: spillovers is not always a reality It is more likely if the subsidiary has a world mandate and NSI has a clear development The globalisation has not produced homogenization and so co-location happens Is there some room for domestic policies? ENEF Conference 2013

I FOREIGN MNES AND DOMESTIC INNOVATIVE CAPABILITIES There is a renewed effort of the countries to attract R&D intensive FDI Subsidiaries look for actives inside the group or outside. Which predominates? (HBE-HBA) The liability of foreignness. In similar scenarios MNEs can find more transaction costs Local governments who put incentives for R&D FDI also are concerned with the hollowing out of local capabilities In this regards It is particularly important to know more about the behaviour of R&D intensive foreign MNEs because they are qualitatively the most important segment for domestic polices. Are they engaged with local R&D cooperation? ENEF Conference 2013

II THE INTERMEDIATE COUNTRIES Intermediate in terms of innovation. Per capita income is a false clue. Truncated (uneven) systems. Production and innovation systems (Malerba) with relevant deficiencies. Less developed innovative activities and particular productive specialisation (traditional versus technology intensive sectors). Lack of coherence in the system. Significant deficiencies in some parts of the system Generally a greater development of public than private sector (see the dimension of the European Innovation Scoreboard) Weakness to face the crisis (Archibugi) It can include a number of less but developed countries (European periphery cases) as well as advanced but laggard emerging economies (Brics) ENEF Conference 2013

ENEF Conference 2013

II THE SPANISH CASE ENEF Conference 2013

II THE SPANISH CASE ENEF Conference 2013

II THE SPANISH CASE: the internationalisation ENEF Conference 2013

II THE SPANISH CASE: the internationalisation ENEF Conference 2013

II THE SPANISH CASE: the internationalisation ENEF Conference 2013

II THE SPANISH CASE: the internationalisation ENEF Conference 2013

II THE SPANISH CASE: the internationalisation ENEF Conference 2013

II THE SPANISH CASE: the internationalisation Domestic firms control inventions made by foreign residents ENEF Conference 2013

II THE SPANISH CASE: the internationalisation Foreign firms control domestic inventions ENEF Conference 2013

II THE SPANISH CASE: THE ROLE OF MNES ENEF Conference 2013

II THE SPANISH CASE: the internationalisation ENEF Conference 2013

II NEW CONTRIBUTION: ARE THERE CONDITIONS FOR REVERSE SPILOVERS? Basic conditions: former studies and the importance of Spain as a receiving country (in spite of the crisis) Novelties: The basic comparison is between foreign and domestic R&D intensive firms: firms which carry out R&D activities over its two digit industry average (NACE) Sectoral taxonomy (Molero and Garcia 2008). Combination of word technological dynamism with country technological advantages. Four categories (Dynamic Specialisation, Retreat, Lost Opportunities and stationary specialisation). Measurement of cooperation intensity: the cooperation of a firm is above the average company in its two digit industry NACE. (number of cooperations) Micro data from Community Innovation Survey We combine single innovation indicators (I.E R&D, Patents, etc) with an aggregated index which synthetises four single indicators. This is a preliminary work (exploration) which continues today with more robust econometric analysis (causality) ENEF Conference 2013

I THEORETICAL AND EMPIRICAL PRECEDENTS In spite of still concentrating most of their R&D activity at the Home-country, it is confirmed an increasingly abroad effort (Cantwell, Dunning, Zanfei, Narula, Patel, etc). In HBA strategies, domestic knowledge from host countries tend to play a relevant role for the subsidiary and the group. Which is the role of cooperation?. Not conclusive studies: from cases where MNEs increment the likelihood of cooperating to others in which clearly the cooperate less. A critical factor arises here: the belonging to a group consideration. ENEF Conference 2013

I THEORETICAL AND EMPIRICAL PRECEDENTS MNEs without technological advantages On the contrary highly innovative subsidiary are likely to engage in local R&D cooperation The engage is much less in host countries which are not at the forefront in science and technology In the opposite case, can be conditions for reverse spillovers (asset seeking strategies) Different cases-different strategies (typologies) ENEF Conference 2013

II IMPACT OF FOREIGN STATUS ON DOMESTIC COOPERATION (I) Comparison between foreign subsidiaries and all Spanish companies (Total sample and subsamples)   All sectors Lost Opportunities Retreat Dynamic Specialization Stationary All firms S Innovation intensive firms according to internal R&D expenditures Innovation intensive firms according to external R&D expenditures S* Innovation intensive firms according to external knowledge acquisition Innovation intensive firms according to R&D personnel per 1000 employees Innovation intensive firms according to the aggregate index ENEF Conference 2013

II IMPACT OF FOREIGN STATUS ON DOMESTIC COOPERATION (II) Comparison between foreign subsidiaries and affiliated Spanish companies. Total sample and subsamples ENEF Conference 2013

II CONCLUSIONS (I) Three contextual issues deserve particular attention. In the global cluster of innovative companies, cooperation complements rather than substitutes for the firm's own innovative efforts. Similarly, cooperation seems to emerge as a way of compensating for obstacles to innovation, particularly in the most valuable kind of sectors: Dynamic Specialization. The wider the market of the firms the stronger is the cooperative activity The general comparison of FS with Spanish firms confirms the higher level of cooperative activities of the former: This general finding is not negligible for a country characterized by a relatively low level of cooperation among firms and institutions. ENEF Conference 2013

II CONCLUSIONS (II) When we control for group affiliation, the situation is substantially different. In most cases the idea of a higher level of cooperative activity among FS is rejected. Superior cooperation levels of Spanish affiliated firms are especially evident in sectors characterized by international technological dynamism, irrespective of whether Spain has technological advantages in those sectors or not. This is a remarkable finding insofar as it is precisely in these sectors where we would, instead, expect to see technological spillovers from innovation intensive FS. The most significant exception is in Stationary Specialization sectors. In these sectors, innovation intensive FS perform significantly more intensive cooperative activities. These sectors comprise a quite substantial number of so called traditional industries. The importance of Spain's technological advantages, together with the magnitude and depth of the domestic market, explain the proactive cooperative behavior of FS, which are likely to obtain positive inputs for their whole multinational network from cooperation in the host country. ENEF Conference 2013

III GUIDELINES FOR POLICY ACTIONS ENEF Conference 2013

III GUIDELINES FOR POLICY ACTIONS The necessary condition of a positive circular causation (MYRDAL) Economic social and industrial policies working together to upgrade attractiveness and absorption capacities ENEF Conference 2013

THANK YOU FOR YOUR ATTENTION José Molero jmolero@icei.ucm.es ENEF Conference 2013