Internationalisation of Corporate Technology: What we know and dont know? Pari Patel SPRU, University of Sussex

Pari Patel22 Context.. internationalisation of R&D and technology is a phenomenon with many dimensions but with - after all - few available observations so far,... leaving ample room for uncertainty and speculation. Granstrand (1992) What have we learnt since then?

Pari Patel33 Outline Academic and policy relevance Measures: Sources, Strengths and Weaknesses Main Results: How Much? Where? In Which Technical Fields? Type of Activity? Future Research : What we don t know

Pari Patel44 Relevance Debates about the nature and importance of foreign R&D. Fears about Hollowing out. Fears about Free-riding by foreign firms. Management of technology within firms.

Pari Patel55 Purpose, Scale & Major Determinant of Foreign Technological Activities.

Pari Patel66 MEASURESTRENGTHSWEAKNESSESSources Research and development Regular and recognised data on main source of technology Lacks detail and Strongly underestimates design, production engineering, and software OECD NSF UK R&D Scoreboard Patents Regular detailed & long- term data available by firm, location, industry, technical fields Uneven propensity to patent amongst countries, sectors and companies; misses software US PTO EPO Innovation Surveys Systematic data on innovative activities of foreign firms Not all countries report nationality of company National Sources Other Ad Hoc Surveys Detailed data, e.g. on motivations for conducting foreign R&D Uneven coverageVarious Main Measures

Pari Patel77 Latest Results on Internationalisation of Technology:

Pari Patel88 Changes in Internationalisation of Technology: 1985 to 2000

Pari Patel99 Internationalisation of Technology by Industry:

Pari Patel10 Importance of Foreign Firms in National Technology:

Pari Patel11 Importance of Foreign Firms in National Technology:

Pari Patel12 Comparing Company Vs Host Country Advantages Analysis of 220 Firms at forefront of internationalisation, distinguishing between technical fields in which: Company is weak at home and the location is strong Company is strong at home and the location is weak Company is strong at home and the location is strong Neither a home advantage nor a locational advantage Main Results: in 75% of cases companies are engaged in foreign activities in technical areas where they have built up strength at home. largest increases (esp. for EU Firms) have been in technologies where there are complementary strengths between the company and the 'host' country.

Pari Patel13 Summary: Stylized Facts European firms (esp. those from smaller countries) more internationalised than US or Japanese firms. European firms greatly increased their foreign activities in 1990s, especially in the US. Foreign large firms are important contributors to European technology, esp. in Chemicals and Electronics. Japanese firms least internationalised & Japan least favoured location.

Pari Patel14 Summary: Stylized Facts (Contd.) Very little activity located outside Europe and the USA. Degree of Internationalisation is not positively associated with R&D Intensity of the Industry or the firm. Recent increases have been in technologies where there are complementary strengths between the domestic activity of a company and the host country.

Pari Patel15 Why do Firms Concentrate their Technological Activities at Home? Launching of a brand new product (when there is a great deal of uncertainty regarding product and process parameters) requires: Strong linkages with suppliers and customers Strong linkages with local basic research in Universities and other public sector institutes. Strong intra-corporate linkages between R & D, production and marketing Strong Home Country Biases in these linkages

Pari Patel16 Some Explanations for Increasing Internationalisation Constraint of Size of the country (lack of specific skills and of advanced users to test major innovations). Large firms need to master increasing range of technologies. Overcome weaknesses in the national science base. Increasing liberalisation leading to greater flows of FDI. By-product of other business strategies.

Pari Patel17 What we dont know Relationship between internationalisation and economic performance. Motives for EU firms conducting their R&D in the US. How much can be explained by M&A? Linkages between foreign firms and the National Science Base.