Strategic Perspectives on the Globalization of Technology

1
Strategic Perspectives on the Globalization
of Technology

• Dr. Denis Fred Simon
• Provost
• Levin Graduate Institute
• State University of New York
• Nanjing, China
• May 28, 2005

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Microcosm The Quantum Revolution in Economics
Technology (Gilder)
.in the past, wealth and power came mainly to
the possessor of material things or to the ruler
of military forces capable of conquering the
physical means of productionland, labor and
capital. Today, the ascendant nations
corporations are masters not of land and material
resources, but of ideas and technologies.
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International Technology Issues New
Perspectives and Issues

• More general awareness of role of technology in
  economic progress and competitiveness NII in the
  US
• Revolution in communications and transportation
• Liberalization of trading policies across the
  globe via WTOmore foreign investment vs. trade
• Closer integration of product and capital markets
• Expansion of MNCs including China and India
• Emergence of four dragons in AsiaTaiwan, Korea,
  Singapore and HK. fifth dragonChina
• Intensification of international
  competitionsearch for new markets, talent, and
  new ways to win markets in China, engineers in
  India, under-utilized know-how in Russia, etc.

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Globalization of Technology

• New centers of technological capability outside
  US, Japan and Western Europe
• Process of technological exploration and
  exploitation has become trans-border/transnational
  
• More rapid movement of technology overseas at
  earlier point in life cycles
• Shift away from unilateral (one-way flow) of
  technology to bilateral (two-way) flows
• Ugrading of technology advance to a national
  priority, esp. as new high tech industries become
  more critical
• More extensive people movement, esp. in ST
  fields formation of a truly global talent pool

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Role of Technology in World of Globalization

• Shift from variable-cost to fixed cost
  competition process and product service
  differentiation count in the end as much as (if
  not more than) costs
• New success element harnessing and managing
  transborder innovationnew core competency
• Competitive firms are those that perform well
  across three dimensions
• Ability to link and leverage knowledge,
  information, and people expertise across borders
• Ability to shift to integrated systems of
  operation and management...software is critical
  as the glue
• Ability to be a technology leader establishing
  the rules and standards of the game

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Technology the Borderless World
We are finally living in a world where money,
securities, services, options, futures,
information, and patents, software, and hardware,
companies and know-how, assets and memberships,
paintings and brands are all traded without
national sentiments across traditional borders.
Kenichi Ohmae former
head-McKinsey Japan
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Trends of Global Movement of Technology

• More rapid movement of technology overseas as a
  result of shorter product life cycles and the
  demands of international competition win
  through technology
• Increased focus on foreign markets for securing
  profits
• More small and medium businesses involved in
  international business, esp. those with high-tech
  focus
• Growing flow of technology into USA
• Greater emphasis on forging strategic alliances
• More government involvement as buyer, supplier,
  and facilitator
• Outsourcing..the recent trend..plugging into
  foreign high tech assetscost, talent, market
  driven

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Factors Associated with Shorter Product Life Cycle

• Acceleration of pace of tech development
• Less time between recognition of feasibility and
  commercialization
• Disengage production from PLC
• Convergence of international markets and cost
  factors
• Standardization of capital costs
• Shift from labor-savings to materials-reducing
  technology
• Changes in international communications and
  transportation
• FDI decision no longer just a response to threat
  to export markets
• Specific product, technology and IPR strategies
• Integrated approach to global licensing
• More environmental scanning strategic location
  identification

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Shortened Product Life Cycles
FIRM PRODUCT TIME CHANGE
General Motors New Buick 60 to 30 mnths
HP Printer 52 to 9-12 mnths
IBM PC Computer 48 to 4-6 mnths
Honeywell Thermostat 48 to 12 mnths
Ingersoll Air Grinder 42 to 12 mnths
Warner Lambert Clutch Brake 36 to 10 mnths
Sony CD Player 24 to 3-4 mnths
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RD Units Follow Japanese Firms to East Asia
Economies

• Japanese companies shifting FDI away from
  reliance on labor-using factories, warehouses
  sales outlets
• Increased emphasis on local R, DE facilities to
  respond more quickly to market shifts
  local/overseas
• Thailand, Philippines, Vietnam and Indonesia have
  become sites for more traditional Japanese FDI
• Matsushita Institute of Technology in Taiwan
• Design work for new product development for Asian
  markets
• Matsushita TV and a/c RD units in Malaysia
  coordinating and integratedbut now moving to
  China
• China is now the new playing ground for Japanese
  electronics industry, including establishing R,
  DE bases

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Emergence of China Next Techno-Superpower?

• China has emerged as a major player in global
  technology affairs much more quickly than most
  would have predicted
• Chinese economy has been beneficiary of
  globalization greater and easier access to
  newer technologies than any developing nation in
  last half of 20th century
• China has huge domestic market it can leverage
  for acquiring technology not 1.3 billion ,
  250-300 m buyers
• Strong commitment to national technology base
  govt investment in national airplane,
  semiconductor industry, nanotechnology and
  biotechnology
• Major site for MNC RD investment China no
  longer simply factory to the world
• Setting new global technical standards
  size?leverage

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International RD Patterns and Agglomeration
Dynamics

• Agglomeration dynamics led to greater
  concentration of RD in postwar perioduntil late
  1990s
• Internationalization has led to a greater
  dispersion of RD activities, and steadily,
  albeit gradually, a shift in the sources of
  technological innovation
• Globalization and regionalization have led to a
  redefinition and reformation of existing
  technological networks
• GE RD?NIsakayuna(NY) Shanghai
  BangaloreMunichSt. Petersburg
• Agglomeration patterns have begin to shift in
  general but are stronger in some industries
  (autos/electronics) than others (food stuffs)
• Technology attracts technology

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Impediments to Globalization

• Regionalization may be a possible impediment to
  globalization, e.g. European Union or even APEC
  in Asia
• Techno-nationalism is growing in some cases
• Shift away from comparative advantage (Adam
  Smith) to creating competitive advantage at
  national level targeting
• Increased pro-active role of government in
  regulatory areas, e.g. environment, standards,
  etc.
• Corporate conservatismboth in terms of internal
  culture and organizational structure.the
  technology is there..but not necessarily the will
• Home country socio-political issues transfer of
  jobs
• Boeing engineers and tech transfer to China ITA
  case brought to Commerce Dept
• More China bashing on the wayIPR issues

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The IPR Issue Current Dilemmas

• Most important assets possessed by successful
  companies are intangible, primarily represented
  by intellectual property codified as well as
  trade secrets or proprietary know-how
• Proprietary know-how produces economic advantage
  by creating barriers to competition from others
• Today, IPR control lies at heart of competitive
  marketplace drives the investment in RD, e.g.
  pharma, and creates an incentives for release of
  info re royalties
• Software (rather than hardware) is the
  battleground, with piracy problems estimated to
  be in tens of US billions
• Bilateral/multilateral agreements only solve ½
  problem
• Must create compliance incentives or rewards
  share in the benefits through collaborative
  exploitation

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Where are we headed?

• Information technology revolution has led to more
  emphasis on coordination vs. control across
  corporate world global playing field
• Companies are less homogenous as the traditional
  wire diagram has given way to more varied,
  complex, and multi-faceted types of cooperation,
  alliances, joint ventures, etc.
• Outsourcing revolution is just the
  beginningdriven not simply by cost differentials
  but by productivity increases at home
• Next battleground is over global standards
  RFID, wireless, cellular tech
• Impact of 9/11 and H1B visa situation has sparked
  reverse brain drain..fewer foreign scientists and
  engineers staying in US..
• US no longer lone ranger as source of
  innovation..global technological leveling is
  occurring
• There is a new gamea truly global game.and it
  is here to stay..we must adapt, adjust, and
  reorient our thinkinginvest in education key is
  already access to high end talent