1. 1 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Internationalisation of Industrial R&D: Some Differentiation from a German Perspective Jakob Edler Fraunhofer Institute Systems and Innovation Research Six Countries Workshop The Internationalisation of Industrial R&D Helsinki, 17-18 June 2004

2. 2 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Germany and the Internationalisation of industrial R&D. A Multi-Dimensional Analysis on inward outward activities Questions Scope and scale of international R&D activities? Differences as for sectors / technologies applied / basic home - abroad What are motivations? Policy Conclusions

3. 3 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 International R&D of German companies

4. 4 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 R&D expenses of foreign companies in the USA Source: US Department of Commerce, graph by DIW and NIW (Legler), Germany

5. 5 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 International activities of German companies (outward) Method: patent data: inter-temporal (1990, 1998), EPAT and PCTPAT company-specific (consolidated) inventors address, filing company sector specific: technological fields (profiles) survey (complementary qualitative data) Sample:

6. 6 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 German companies abroad: extent of patent activities 1990/1998 share of international patents has grown: 11,64 % to 14,6% target regions not changed very much high variance as for technological areas: 19981990Diff.19981990Diff. Biotechnology43.5830.6712.91Telecommunications9.2112.70-3.49 Medical technology38.4133.834.58Construction/ Building8.933.235.70 Pharmaceuticals33.2918.6814.61Transp. /Aeron. /Weapons8.133.614.52

7. 7 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Sector specific patent registrations: foreign shares of German companies uneven internationalisation: sector variations have grown!

8. 8 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 broadening of international activities concentration of patent activities abroad not significantly higher than at home high (and increasing!) match of foreign and domestic profiles of the companies (true at sector level also!) low (and decreasing) match of foreign company patent profile and host patent country profiles (example: USA): strong and growing relationship between science intensity and (net) foreign specialisation across the board In sum: market (broadening) and forefront knowledge Patterns of foreign patent specialisation of German companies

9. 9 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Motivations to go: strong: adaptation (market, regul.), near to costumer, knowledge seeking, R&D monitoring weak: risk capital, foreign subsidies/tax regulation, R&D costs, integration of foreign suppliers Motivations to stay: strong: synergy with other activities, co-ordination with key costumers, economies of scale, fear of loss of Know How, established R&D co-operations in German weak: high costs of re-integrating foreign knowledge, German subsidies, Germany as market Patterns of Motivation

10. 10 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 R&D of foreign MNEs in Germany

11. 11 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Share of R&D expenses of international companies (2001) Sources: OECD, Science, Technology and Industry Scoreboard (2003). - SV-Science Statistics - DIW-Berlin. SWE, NED, JPN 1999, FRA 1998.

12. 12 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 R&D of foreign MNEs in Germany Methodology differences: Publications (stand alone) for German subsidiaries (RLS) Co-publication with German partners no inter-temporal comparison Sample:

13. 13 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Patent activities of foreign MNEs in Germany Technological areas: mechanical engineering (horizontal technology) most important Attractivity of Germany very uneven across sectors and technological areas Sectors:

14. 14 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Technological profiles match German technological profile (Corr. 0,59), but not headquarters profile strong in German Lead Markets (Mech. Eng., Chemistry, Environm.) Knowledge seeking? No correlation between knowledge intensity and the German specialisation of the foreign companies across the board however: reciprocal internationalisation in most knowledge intensive areas Patterns of patent specialisation of foreign companies in Germany

15. 15 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Basic research of foreign MNEs in Germany: Publication analysis basic research is done more broadly / less selective than applied research high match of global and German activities of foreign MNEs (0,6) no match of German country profile and foreign MNEs German profile still: high variation of Net German Publication profile across scientific areas: positive: medical techn. (40%), environmental techn., chemical processing, biotech! negative: organic chemistry, pharmaceuticals Sector: a reverse pattern

16. 16 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 high level of co-operation with industry more than 20% of partners from industry (while only 9% of all publications in Germany are from industry) high variations across scientific fields (telecomm, environmental above 30 %) German subsidiaries almost half of all publications as co-publications with German partners approx. 60 % Universities, 25 % other public research institutes, 18,5% Industry Activitiesforeign headquarters more co-publications than subsidiaries absolutely more partners higher share of industry partners 23% Basic research of foreign MNEs in Germany:(Co-)Publication analysis

17. 17 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Understanding your country as host: A profile of attractiveness of Germany Germany as host: more attractive in market oriented activities Top areas: biotechnology and environmental technologies Net patent and publication profile of foreign companies in Germany

18. 18 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Summary of Findings Germany abroad Higher internationalisation, but uneven across sectors and technological areas Variations between sectors have grown foreign profiles and concentrations have adjusted to domestic profiles (sector level) knowledge intensity makes a difference motivations market driven, political framework least important Germany as host highly attractive as for market related research High level of co-operation, especially foreign headquarters Reciprocal internationalisation in knowledge intensive fields

19. 19 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Final Thoughts on Policy Consequences Subsidies not the major leverage Talent and accessibility of knowledge creating structures the key Integration of foreign companies into knowledge networks Help to take advantage of international specialisation: strengthen domestic strengths Incentives to keep companies at home might backfire (market and knowledge) Actions in international knowledge transfer?

20. 20 Jakob Edler: Internationalisation of Industrial R&D: Some Differentiation from a German Perspective 6 CP - Workshop, Helsinki, June 2004 Contact Jakob Edler j.edler@isi.fhg.de