Globalization of Corporate R&D - a conceptual framework by 9E8vB1HJ


									Policies to attract and benefit
 from globalization of R&D
          Prasada Reddy
        Research Policy Institute
           Lund University
                 Category of R&D units

• Technology transfer units (TTUs) - to facilitate transfer of parent’s
  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
      Corporate R&D - prior to the 1960s

Home Country-based R&D

  - need for coordination between manufacturing, R&D,
  finance & marketing,
  - R&D scale economies.
  - sophisticated and advanced home markets,
  - technologically advanced home economies.
 Evolution of Globalization of R&D - 1960s

The beginnings of internationalization of R&D - first wave
  TTUs (adaptation R&D) -
  - need to tap markets abroad,
  - technology transfer for cost effective production.
  - large local markets,
  - proximity to production facilities.
Category of industries - mechanical, electrical, and
  engineering, including automobiles.
  Evolution of Globalization of R&D - 1970s

The growth of internationalization of R&D - second wave
  - to enhance market share in local markets abroad,
  - need to understand sensitivity of local consumer,
  - host country government policies.
  - large and protected markets with unique characteristics,
  - proximity to market and production.
Category of Industries - branded packaged consumer goods,
  chemicals and allied products.
  Evolution of Globalization of R&D - 1980s
External forces in the business environment:
   - liberalization of economies worldwide,
   - homogenization of consumer preferences worldwide,
   - emergence of regional markets,
   - science-base of new technologies and multidisciplinary
Internal forces:
   - rationalization of TNCs’ operations, leading to
   specialization of affiliates,
   - world and regional product mandates for affiliates
 Evolution of Globalization of R&D - 1980s
From internationalization to globalization of R&D - third
  wave GTUs/RTUs/CTUs
  - need for monitoring and learning the new trends
  - need for multi-sourcing of technology inputs.
  - 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.
  Evolution of Globalization of R&D - 1990s

Evolving patterns globalization of R&D - fourth wave
  (location of R&D outside the industrialized world)
  - shortage of R&D personnel in industrialized world,
  - increasing R&D costs.
  - availability of R&D personnel at lower costs in some
  developing countries,
  - 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.
National Policies for attracting global R&D 1

• General Agreement on Trade in Services
  (GATS) - R&D as a service (trade affiliate
  to parent)
• R&D as a Performance Requirement
  - International framework, TRIMs, PTIAs
  & BITs
  - Incentives vs. subsidies (SCM Agreement)
National Policies for attracting global R&D 2

• Performance requirements - implications for type of R&D.
• Standards & Regulations (depends on the size of the
   - technology monitoring units
Strengthen national innovation system (domestic R&D, start-
Driving force - access to skills
Access to national research programs
      Regional Policies for global R&D

• Availability of human resources (numbers) in
  required specializations.
• Programs in local universities.
• Science Parks (thematic).
• Focus on areas of competitive strength
• Cluster development
• Incubators
• Regional Investment Promotion Agency

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