CO SCI 136 Lecture Notes - Lecture 4: Economic Globalization, Technological Change, High Tech
Ch. 12: GLOBALIZATION OF INNOVATION
The Role of Multinational Enterprises
By Rajneesh Narula and Antonello Zanfei
12.1 Introduction
• Economic globalization – growing interdependence
• Technological change and MNEs as primary driving force
o Mechanisms: FDI, trade, lincensing, cross-patenting, collaborations
12.2 Trends in the Internationalization of Innovative Activities
• Three main categories:
o Cross-border commercialization of National Technology
o Technological and Scientific Collaborations
o Cross-Border generation of innovation
12.2.1 The Cross-Border Commercialization of National Technology
• Key indicators: international trade flows, cross border patenting
• Share of high-tech products in world exports: 1976 8%, 2000 23%
→ globalization of technology flows increasing
• Internationalization of patenting (Table 12.2)
12.2.2 Technological and Scientific Collaborations
• “noninternal” options: cooperation with competitors, suppliers,
customers, external institutions → strategic technology partnering (STP)
• global inter-firm alliances have become increasingly popular
• percentage of equity agreements has declined
• non-equity alliances: growing use by MNEs of STPs as rapid, short-term
vehicle
12.2.3 The Role of MNEs in the Cross-Border Generation of Innovation
• growth in MNE activity and FDI since WWII
• primary source of outbound FDI: industrialized countries (2001: 90%)
• inward FDI: 68% directed towards Triad (US, Japan, EU) countries
• > 1/3 of top 100 MNEs in most R&D-intensive industries
• large MNEs dominant role in home country innovative activities +
growing share outside their home countries
• origins of international R&D investment flows differ widely
o UK, Switzerland, NL greatly expanded offshore R&D since WWII
o Eg France, Germany: few large MNEs outward R&D grown more
gradually
o Countries with major offshore R&D declined since 1914 (US)
• EU countries larger share of patents from subsidiaries than US and Japan
• European firms concentrate a large share of international R&D in US
→ MNEs increasingly internationalize their innovative activities (exceptions:
Japan)
→ don’t internationalize their innovative activities at the same rate as their
production activities
• Low degree associated with:
o Complex nature of systems of innovation
o Embeddedness of the MNE’s activities in the home
environment
o Internal cohesion within the MNE
o High quality of local infrastructure and appropriable regimes
12.3 Overseas Innovative Activities of MNEs: Theoretical and Empirical
Issues
• Tow firm level motives:
1. Asset-exploiting R&D
a. Associated with demand-driven innovative activities
2. Asset-augmenting R&D
Document Summary
12. 1 introduction: economic globalization growing interdependence, technological change and mnes as primary driving force, mechanisms: fdi, trade, lincensing, cross-patenting, collaborations. 12. 2 trends in the internationalization of innovative activities: three main categories, cross-border commercialization of national technology, technological and scientific collaborations, cross-border generation of innovation. 12. 2. 1 the cross-border commercialization of national technology: key indicators: international trade flows, cross border patenting, share of high-tech products in world exports: 1976 8%, 2000 23% Mnes increasingly internationalize their innovative activities (exceptions: 12. 3 overseas innovative activities of mnes: theoretical and empirical. Emergence of global centres of excellence in a specific field. European patents field divided by its share of all european patents in all fields: rt>1: relative advantage of the country/firm. 12. 4 forces supporting concentration and dispersion of r&d: centrifugal and centripetal forces concentration and dispersion factors. Costs of becoming familiar might be prohibitive because of resource limitations, minimum threshold size for r&d.
