International R&D Strategies for Developing Country MNCs

I recently came across two interesting articles on the important topic of international research and development (R&D) strategies in companies from developing countries.  Not surprisingly, both articles relied on survey data from China.

Zhang relied on in-depth case studies of R&D investments by Chinese companies in Europe and the US to analyze the international R&D strategies of those companies and found interesting differences based on the location of the investment activities.  In Europe, for example, Chinese companies were “more insulated from [the] local innovation system, getting access to good indigenous labor rather than local partners” and tended “to engage [in] less explorative and more exploitative R&D activity” that focused on adapting technologies self-developed for the European market.  In contrast, when Chinese companies became involved with R&D investments in the US they were much more interested in securing “long-term local embeddedness”.  Click here to download the article.

Zedtwitz used his investigation of a large sample of technology-intensive Chinese firms to learn more about how firms from developing countries are approaching outbound R&D investment and relied on his results to propose two concepts of international R&D strategies for such firms: “innovation capability enhancing”, which includes developing the capacity to “understand and conduct cutting-edge technology development by absorbing know-how from advanced countries”, and “innovation capability exploiting”, which includes exploitation of “technologies and technical know-how which has been absorbed earlier and refined for use in other developing countries”.  The results that Zedtwitz compiled from his sampling of Chinese firms led him to speculate that companies from developing countries will internationalize R&D into advanced countries to remedy shortcomings in their domestic technologies and enhance their long-term ability to compete technologically in foreign markets.  In addition, however, developing country firms are keen to engage in “opportunistic” R&D investments in other developing countries; first to fulfill the requests of local customers and then later to pursue, and hopefully achieve, long-term first-mover advantages in countries that are currently less privileged but which may ultimately emerge as important markets.  Click here to download the article. 

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