National Innovation Systems and the Outsourcing of Research Conference on Global R&D in China Nanjing, May 27-29, 2005 Richard P. Suttmeier University of Oregon

The “NIS” Concept  Innovation as systemic phenomenon  The relevance of institutional and cultural legacies  The “national” in “NIS”  NIS and the globalization of innovation  Contradictions?

“Outsourcing”  Markets, hierarchies, transaction costs, and the search for “complementary assets”  The changed calculus The IT revolutionThe IT revolution Challenges of innovationChallenges of innovation “Global” diffusion of S&T capabilities“Global” diffusion of S&T capabilities  Rethinking the “boundary of the firm”

Outsourcing R&D and NIS  Companies and countries  The inevitable tensions between “source” and “target”  Enhancing NIS through techno- globalism ? Managing tensions through domestic compensatory measuresManaging tensions through domestic compensatory measures Harmonization of international normsHarmonization of international norms  “Win-win” outcomes?

The China Case  NIS characteristics Capable research systemCapable research system Weak industrial innovation traditionWeak industrial innovation tradition Research – production gapResearch – production gap IPR, VC problemsIPR, VC problems  Trajectory of Chinese NIS(?) “Enterprise - centered” (model 1)“Enterprise - centered” (model 1) “Networked” (no center) (model 2)“Networked” (no center) (model 2)

Foreign R&D in China  Add value to NIS Exploit under-utilized talentExploit under-utilized talent Incubate talentIncubate talent Capitalize innovationCapitalize innovation Illustrate how to close the research – production gapIllustrate how to close the research – production gap Demonstrate network managementDemonstrate network management Reinforce “model 2”Reinforce “model 2” Promote harmonization of normsPromote harmonization of norms

Questions  Relative and absolute gains  Are national compensatory policies consistent with the network “imperatives” of outsourcing?  Foreign R&D and International Cooperation in S&T (ICST) “Spillovers”“Spillovers” Effects on “self-organizing communities”Effects on “self-organizing communities” Business models and the “intellectual commons”Business models and the “intellectual commons”