Globalization of Corporate R&D - 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).

Globalization of R&D - actor network (Reddy, 2000) Transnational Corporation Home CountryHost Country degree of globalization degree of integration degree of complementarity R&D

Category of R&D 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).

Corporate R&D - prior to the 1960s Home Country-based R&D Demand side forces: - need for coordination between manufacturing, R&D, finance & marketing, - R&D scale economies. Supply-side forces - sophisticated and advanced home markets, - technologically advanced home economies. (Reddy, 2000)

Demand side forces: -need for coordination between manufacturing, R&D, finance & marketing -R&D scale economies Supply side forces: -sophisticated & advanced home markets -technologically advanced home economies - Corporate R&D in Home Countries Corporate R&D in the 1960s

Evolution of Globalization of R&D s The beginnings of internationalization of R&D - first wave TTUs (adaptation R&D) - 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)

Evolution of Globalization of R&D s The growth of internationalization of R&D - 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.

Internationalization of production & R&D to adapt products and processes to local conditions (TTU) 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 - Internationalization of R&D to develop products exclusively for the local market abroad (ITU) Corporate R&D 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 & processes better suited to local conditions -technical training of local staff Internationalization of corporate R&D in the 1970s Host country effects: -products better suited to local needs and tastes -better use of local materials -potential linkages to local S&T system

Evolution of Globalization of R&D s (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

Evolution of Globalization of R&D s (2) From internationalization to globalization of R&D - 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 & R&D, - 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 S&T capabilities. (Reddy, 2000)

Internal forces : - rationalization of TNCs' operations leading to specialization of affiliates Globalization of R&D into industrialized countries to develop products for the regional/global markets and to carry out research in generic technologies (RTU/GTU and CTU) Globalization of Corporate R&D : Since the 1980s External forces in business environment : - liberalization of economies worldwide - homogenization of consumer preferences worldwide - emergence of regional markets - increasing global competition - science-base of new technologies Supply-side forces : - improved information and communication technologies - flexibility of new technologies that allows delinking of manufacturing and R&D - comparative advantages of host countries Demand-side forces : - need for monitoring & learning the new trends worldwide - need for multi-sourcing of technology inputs

Evolution of Globalization of R&D s Evolving patterns globalization of R&D - fourth wave GTUs/RTUs/CTUs (location of R&D outside the industrialized world) Demand side forces: - shortage of R&D personnel in industrialized world, - increasing demand for R&D personnel, - increasing R&D costs. Supply-side forces - availability of R&D personnel in some developing countries, - low-level of wages of personnel, - divisibility of R&D 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 R&D network, inculcation of commercial culture among scientists, technology transfer and emergence of spin-off firms.

Globalization of R&D into industrialized countries to develop products for the regional/global markets and to carry out research in generic technologies (RTU/GTU and CTU) Host country effects: -strong linkages with the local S&T system widening its capabilities -international specialization of S&T capabilities Demand-side forces: -shortage of R&D personnel in industrialized countries -increasing demand for R&D personnel -increasing R&D costs Supply-side forces: -Availability of R&D personnel in some developing countries -low-level of wages of personnel -divisibility of R&D 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 R&D into some developing countries Host country effects: -diffusion of knowledge into local S&T system through strong linkages with TNCs global R&D network -inculcation of commercial culture among the scientific community -technology transfer and emergence of spin-off firms Globalization of Corporate R&D : Since the 1990s