GLOBAL COMPETITION AND TECHNOLOGY Also by Robert Pearce GLOBALISING RESEARCH AND DEVELOPMENT (with Satwinder Singh) INTERNATIONAL ASPECTS OF UK ECONOMIC ACTIVITIES (with Peter J Buckley) PROFITABILITY AND PERFORMANCE OF THE WORLD'S LARGEST INDUSTRIAL COMPANIES (with John H Dunning) THE GROWTH AND EVOLUTION OF THE MULTINATIONAL ENTERPRISE THE INTERNATIONALISATION OF RESEARCH AND DEVELOPMENT BY MULTINATIONAL ENTERPRISES THE TECHNOLOGICAL COMPETITIVENESS OF JAPANESE MULTINATIONALS (with Marina Papanastassiou) THE WORLD'S LARGEST INDUSTRIAL ENTERPRISES (with John H Dunning) US INDUSTRY IN THE UK (with John H Dunning) Global Competition and Technology Essays in the Creation and Application of Knowledge by Multinationals Robert Pearce Reader in International Business University of Reading First published in Great Britain 1997 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library, ISBN 978-1-349-25858-1 ISBN 978-1-349-25856-7 (eBook) DOI 10.1007/978-1-349-25856-7 First published in the United States of America 1997 by ST MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y 10010 ISBN 978-0-312-17634-1 Library of Congress Cataloging-in-Publication Data Pearce, Robert D., 1943Global competition and technology: essays in the creation and application of technology by multinationals / Robert Pearce p cm Includes bibliographical references and index ISBN 978-0-312-17634-1 (cloth) I International business enterprises Technological innovations Competition, International I Title HD2755.5.P398 1997 658'.049-dc21 97-18621 CIP © Robert Pearce 1997 Softcover reprint of the hardcover 1st edition 1997 978-0-333-67183-2 All rights reserved No reproduction, copy or transmission of this publication may be made without written permission No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WI P 9HE Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources 1098765 432 06 05 04 03 02 01 00 99 98 I 97 Contents vii List of Tables Acknowledgements Xl Notes on the Authors PART I X111 STRATEGIC EVOLUTION AND TECHNOLOGY IN MNEs Global Interdependence, MNE Strategy and Technology The Implications for Host-Country and Home-Country Competitiveness of the Internationalisation of R&D and Innovation in Multinationals Motivation and Market Strategies of US Foreign Direct Investments: An Analysis of Host-Country Determinants with Marina Papanastassiou PART n 13 51 OVERSEAS R&D AND TECHNOLOGICAL DIVERSITY IN MNEs Motivation and Organisation of Decentralised R&D with Satwinder Singh Overseas R&D Laboratories in MNEs: An Analysis of Their Roles and Motivations with Satwinder Singh v 81 101 vi Contents Global-Innovation Strategies of MNEs and European Integration: The Role of Regional R&D Facilities with Marina Papanastassiou Finn-Strategies and the Research Intensity of US MNEs' Overseas Operations: An Analysis of Host-Country Detenninants with Marina Papanastassiou 123 153 PART m INDUSTRY AND COUNTRY CASES The Potential Role of Romania's Technological and Scientific Capacity in Attracting FDI: An Exploratory Analysis of its National System of Innovation with Julia Manea The European R&D Operations of Japanese Multinationals 10 The Globalisation of R&D in Phannaceuticals, Chemicals and Biotechnology: Some New Evidence with Gurkanwal Singh Pooni 183 217 239 PART IV POLICY CONCLUSIONS 11 Industrial Policy, MNEs and National Technology 277 Bibliography 285 Index 291 List of Tables 2.1 Importance of managerial issues as perceived by technology executives in multi-technology corporations in USA, Japan and Sweden 2.2 Growth rates in US patents granted to the world's largest firms, by home country of firm 16 35 2.3 Share of total US patents granted to the 3.1 world's largest firms accounted for by their overseas R&D, by home country of firm 36 Regressions with total exports as a percentage of sales (EXPTOT) as dependent variable 67 3.2 Regressions with exports to US as a percentage of sales (EXPUS) as dependent variable 68 3.3 Regressions with exports to other countries 4.1 as a percentage of sales (EXPOC) as dependent variable 69 Parent laboratory evaluation of factors influencing the type of work done in overseas R&D units 85 4.2 Relative position of different types of R&D in overseas and home-country laboratories of MNEs 91 4.3 Parent laboratory evaluation of the nature of interaction between parent and overseas affiliate R&D units vii 95 viii List of Tables 5.1 Prevalence of particular types of overseas R&D laboratories 102 5.2 Conditions and circumstances considered to have most influenced recent decisions with regard to development of subsidiary R&D units 110 5.3 Nature and frequency of parent or sister affiliate laboratory involvement in the projects of subsidiary R&D units 117 5.4 Extent to which MNE subsidiary laboratories give contract work to host-country scientific institutions 6.1 Sources of technological work carried out 6.2 6.3 6.4 6.5 6.6 6.7 7.1 for MNE subsidiaries MNE subsidiaries' evaluation of the importance of various types of work in their research laboratories MNE subsidiaries that create and supply a new product: evaluation of reasons for doing so Sources of technology used by MNE subsidiaries Extent of technological adaptation of MNE subsidiaries MNE subsidiaries' evaluation of their collaborative research with local organisations Sources of funding for MNE subsidiaries' R&D laboratories Multiple regressions with RAD as dependent variable 120 128 130 132 133 137 140 142 166 List of Tables 7.2 Multiple regressions with ROY as dependent variable 8.1 Expenditure on education and R&D as a percentage of total Romanian Government budget, 1960-89 8.2 The distribution of employment by principal economic sector, 1960-89 9.1 Future R&D structure of Japanese MNEs 9.2 Reasons for centralising R&D in head office of Japanese MNEs 9.3 Numbers of Japanese companies' R&D laboratories in Europe, 1989 and 1994 9.4 Reasons for promoting localisation of R&D in Europe by Japanese MNEs 9.5 Factors influencing location of Japanese R&D centres in Europe 10.1 Proportion of respondents with production subsidiaries in particular host countries, by home country of company IX 168 203 204 221 224 226 230 234 243 10.2 Evaluation by central laboratories of aspects of their group's current operations 244 10.3 Central laboratories' evaluation of the R&D strategy of their parent company 246 10.4 Central laboratories' evaluation of reasons for choice to conduct R&D abroad 251 10.5a Evaluation by central laboratories of reasons for locating R&D laboratories in particular locations: (a) the existence of particular national research and technological expertise 257 ... INDUSTRY IN THE UK (with John H Dunning) Global Competition and Technology Essays in the Creation and Application of Knowledge by Multinationals Robert Pearce Reader in International Business University... strategy The second of the trends has been the increasing internationalisation of the markets and the production networks of the leading corporations, and the change in their modes of international competition. .. related to their activities involving the creation and application of technology) both respond to, and help to intensify, the forces of international competition and the globalised pursuit of efficiency