Internationalisation of R

1
Internationalisation of RD Trends and
Consequences

• Prepared by
• Susi Andriani
• Gastón Lemaître
• Aminul Islam

Management of RD TIM-99 December
2000
2
Content

• Overview
• Trends
• Internationalisation or globalisation of RD
• Elements of the internationalisation process
• International exploitation of technology
  (National Basis)
• International techno-scientific collaboration
• International generation of innovation
• Consequences
• Consequences of the internationalisation of RD
• Barriers to RD internationalisation
• Critical success factors of internationalising
  RD
• Case Study Sony a global culture
• Conclusions

3
THE FACTS

• The pioneer of RD internationalization are
  high-tech companies (ABB, Novartis, Hoffman
  La-Roche, Philips, Ericsson, ...)
• 1985-1993 overseas investment in RD by US firms
  increased three times as fast as RD domestic
• 1991 Japanese multinational companies performed
  less than 5 of their RD abroad but recently
  the establishment of Japanese laboratories in US
  and Europe increase
• European companies performed about 1/3 of their
  RD outside their home countries
• Triad Nations in global RD USA, Japan
  European Countries

• Boutellier, Gassmann, Zedtwitz, Managing Global
  Innovation, 1998

4
Why do RD Internationally

• To be closer to government and those who set
  product standards 
• To allow connection to production sites 
• To take advantage of lower costs in other
  countries 
• To be close to customers so as to understand
  their preferences 
• To be able to take advantage of local knowledge
  resources and infrastructure 
• Multiple sites allow more ideas to be generated
• Lack of intellectual resources in home country 

• http//cbi.gsia.cmu.edu/newweb/1995WorkingPapers/9
  5-14RD95group/95-14.html

5
Internationalisation orGlobalisation of RD?

• Globalisation pinpoint a new quality in the
  internationalisation of the economy
• Increasing mobility of production factors
• Distribution of corporate activities among
  different countries
• Internationalisation involves various countries,
  in which single actors belong to a single state
• A company is active in different countries, but
  can be assigned to one state of origin
• Related to the classical definition of
  multinational enterprises
• Techno-globalism International generation,
  transfer and diffusion of technologies
• Triadisation?

6
Elements of theInternationalisation Process
Source ETAN Working Paper, Internationalisation
of Research and Technology Pag. 4, Brussels - 1998
7
International exploitation of technology
(National Basis)
Source Extracted from ETAN Working Paper,
Internationalisation of Research and Technology
Pag. 8, Brussels - 1998
8
International exploitation of technology
(National Basis)

• International high tech trade grew from 9.5 of
  world trade (1970) to 21.5 (1995).
• In 1981, 38 of the patents in European countries
  were on average, applied by domestic investors,
  In 1993 only 19 (US 53 and J 87).
• All countries of the EU became net importers of
  technological knowledge, whereas the US and
  especially J are net exporters of technology.
• Annual average growth rate of FDI inflows and
  outflows of 15 and 17,4 (1983-95).

9
International techno-scientific collaboration
(Public RD)

• The share of foreign students of all students is
  below 10 in EU member states and did not grow
  significantly.
• The largest number of foreign students in the EU
  member states is from Europe.
• 24 of all co-authored articles are
  internationally co-authored (1988-93) and above
  average growth in most EU members.
• Academics from Europe cooperate more
  internationally than academics of US or J.

10
International techno-scientific collaboration
(Firms)

• International technology alliances between firms
  have doubled over the 80s reaching 60 of all
  inter-firms alliances.
• The internationalisation process is characterised
  by triadisation (alliances between companies
  from US,EU and J).
• New interregional alliances (between EU-US and
  J-US) have gained in importance since the 80s.
• US companies are clearly the most wanted
  cooperation partners.

11
International generation of innovation

• RD investment from foreign firms in the US has
  grown by 11.4 per year (1980-1994)
• Generation of innovations is heavily concentrated
  on US, Europe and J.
• Measured by patent analysis, 22,4 of European
  large firms RD is conducted outside Europe,
  11,9 conducted in Europe by foreign large firms
  (Top 359 largest firms)
• Dramatic increase of the inventions developed by
  European multinationals from subsidiaries outside
  Europe (growth rate of 149 from 1985 to 1995).
• Highly internationalised firms tend to
  concentrate RD at few world wide leading
  locations and establish centres of competence.

12
Consequences of the Internationalisation of RD

• Establishing Competence Centres at Different
  Locations

• To interact specific technological competence is
  of greater relevance than the traditional motives
  for siting production abroad.

• The trend towards research competencies and
  leading -edge centres at various location

• Global technology strategy

• The competition between innovation systems will
  increase, Incremental innovation, Radical
  innovation

13
Consequences of the Internationalisation of RD

• Formation of High Performance Units and Clusters

• Cluster formation

• Centers of excellence

• RD laboratories are set up primarily where the
  best conditions are to be found world-wide

14
Consequences of the Internationalisation of RD

• The variety of Co-ordination Mechanisms

• ....growing problems of co-ordination led to
  disillusion and the increasing formation of
  centers in a global context

• .... many multinational enterprises are
  experimenting with various mechanisms for
  steering and integration, with the aim of
  creating synergies world-wide and avoiding the
  duplication of tasks

• The hybrid co-ordination mechanisms are often
  used for the simultaneous co-ordination

15
Consequences of the Internationalisation of RD

• Management of Corporate Research
• and Future Business

• Second bests models

• The enterprises are frequently trying to
  establish a balance between central research and
  development in divisions or business groups but
  no best practice has been found.

16
Consequences of the Internationalisation of RD

• Change the National Innovation Policy

• The national innovation policies will lose in
  significance as a result of internationalization

• Impact on Education, Research and Technology

• The Significance of Lead markets

17
Barriers to RD internationalisation

• Immobility of top class personnel
• Redundant development
• Language and cultural differences
• Much of scientific and technical information
  worldwide available by internet
• Specific know-how easily lost when support not
  present
• Political risks
• No wage advantages in triad nations
• Coordination and information costs

18
Critical Success Factor of Internationalising RD

• Approach collaboration and must avoid
  "intellectual colonialism."
• Be highly integrated with business directions.
  But remain independent in thinking of how to
  meet business needs.
• Throw nets wide, and keep the "Global/Local"
  thinking
• Foster the personal relationships over time
  between researchers that are critical to reducing
  cultural and stylistic differences
• Make maximum use of available information systems
• Supplement the need for occasional face-to-face
  interaction with an effective communication
  system
• Press for speed. 80 of the value of a new
  technology goes to the one who gets to market
  first

19
CASE STUDYSONY A Global Culture
20
Sony Corporate Data

• Company name Sony Corporation
• Founded 7 May 1946
• Headquarters Tokyo, Japan
• Capital 451,550,454,641 (as of March 31, 2000)
• Major Product Audio, video, Televisions,
  Information Communication, Electronics
  component others

Source Sony global website http//www.world.sony
.com
21
Sonys RD facts

• From the transistor radio, Trinitron color
  TV, stereo walkman until entertainment business
  (music movies)
• First RD overseas in San Jose, California
  (1977)
• Second RD Basingstoke, UK (1978)
• 1996 Sonys total sales 5,663 Billion (70
  represented sales from foreign markets)
• 1996 Sonys number of employees 151,000 (57
  outside Japan)

Source Sadanory Arimura, 1999, How Matsushita
Electric and Sony Manage Global RD,
http//www.onlinejournal.net
22
Reasons of Sonys global RD

• To deal with problems that could not be resolved
  by Internationalization of manufacturing and
  sales alone
• Sony has a corporate history and culture that
  encourage globalization of RD
• Sonys policy (1953) thinking and producing
  with global perspective and making efforts to
  export its product

23
Missions....

• Set Sonys technological foundation, create the
  next generation technologies
• Contribute to technology and science progress in
  the World
• Train talented individual researchers and
  engineers to high level of ability

24
Goals ...

• Clear vision and policy
• Clear target and discrimination of strategy from
  competitors
• Strategic selection and sharp focusing of RD
  themes and fair evaluations
• Excellent researchers/engineers/managers in every
  field and in every class in which we are doing
  RD
• Mobility of technology and human resources inside
  the worldwide Sony
• Internal and External globalization

25
CTO Management System
USA
Europe
CTO Research labs others
CTO European RDs
Held twice a year (Japan overseas)
Global RD Meeting
Japan
CTO Corporate Labs RD Div. in internal
companies
CTO Central Technology Office
Source Sadanory Arimura, 1999, How Matsushita
Electric and Sony Manage Global RD,
http//www.onlinejournal.net
26
Sony Europe RD Global Location

• Stuttgast-Fellbach
• DAB
• Mobile Multimedia
• TFV-Platform
• Telecom Systems
• Home Network
• Man-Machine Interface
• Material
• Environmental

• Bruessels
• Aperios
• Digital Networks Solution

• Basingstoke
• Broadcast
• Systems
• Digital Networks Solution

• Paris
• Computer Science Lab

Source Hans-Georg Junginger, Globalisation of
RD and Technology Market
27
Benefits from Sonys Central Office Technology
Management

• Global synergy among the different labs
• Reducing coordination cost
• Gaining Flexibility
• Sonys overseas labs never lose their autonomy

28
Conclusions

• The internationalization of research and
  technology is still characterized by
  Triadisation involving the US, the European
  Union and Japan.

• European firms are highly internationalized in
  ST, and interested in an increase of
  international technology alliances and
  international generation of innovation beyond
  intra-European cooperation

• A new paradigm of transnational research and
  technology emerges, intense market and technology
  interaction

• The centres of competence at different
  geographical locations and interactive technology
  transfer.

• The emerging and appropriate division of labor in
  policy and strategy at the regional, national and
  international level.