The Globalization Technology

Friday 15 June 2018

Module
“Globalization:
Forces, Players and Management”
Birkbeck College
University of London
Professor Daniele Archibugi
 Outline of the lecture
• The production of technology across the
world
• The taxonomy on the globalization of
technology
• Companies’ strategy to develop innovation
• The globalization of intellectual property
rights (IPRs) (Second part)
Two key research questions
• Is globalization a structural or volatile
phenomena?
• Can globalization be reversed?

Practical Relevance
• R&D and innovation managers in uninational or
multinational companies need to know how to
locate activities in the international market
• Public players need to interact with an
increasingly fragmented geography of innovation
Time–space compression (also known as space–time
compression and time–space distantiation), first articulated in
1989 by geographer David Harvey in The Condition of
Postmodernity, refers to any phenomenon that alters the qualities
of and relationship between

space ----------- and ------------- time.

Time–space compression often occurs as a result of

technological innovations that condense or elide spatial
and temporal distances, including technologies of
communication (telegraph, telephones, fax machines,
Internet), travel (rail, cars, trains, jets),
and economics(the need to overcome spatial barriers,
open up new markets)
Technology and Globalisation:
A Few Examples
• Financial Markets
• Fashion
• Imitation of product and process
innovations
• Standardisation
• Software
 But…the globalisation
of technology
is not for everybody
• A large part world population is without
electricity at home
• A substantial share of the world population
has never made a telephone call
• Nearly one billion people have no access to
drinking water
Global R&D expenditures
2013, (source: US NSF)
 Gross
R&D
Exp.
by
country
 How Globalisation Affects
Science and Technology
• “Japanese take-over downsize national R&D lab”
• “German budget too small to compete in HDTV”
• “U.S. funds research at former Soviet germ warfare labs”
• “Europeans expect from us AIDS cure”
• “Foreign passports, U.S. doctorates”
• “Higher quota urged for immigrant Technology Workers”
• “Foreign Pharmaceutical R&D in the country become
larger than National”
• “Can we trust TNCs technology?”
 A Taxonomy
of the
Globalisation of Technology

Categories
International Exploitation of Nationally
Produced Innovations
Global Generation of Innovations
Global Techno-Scientific Collaborations
What is out from the taxonomy?

Knowledge produced
and used within
the borders of a
national state
Knowledge which is
transmitted across
countries without any
deliberate effort by
agents
 Implication of the
Taxonomy for Companies
Not only multinational corporations need a
global innovation strategy
Uninational corporations also operate in
global markets as
• Purchasers of capital goods and
disembodied knowledge
• Exporters of commodities, ideas and
innovations
 Globally, stronger Intellectual
Property Rights
• Trade Related Intellectual Property Rights
(TRIPS) provide a greater enforcement at the
WTO
• In the USA, domestic stronger patent rights
through the patent court
• Will IPRs make a difference in the generation
and exploitation of knowledge?
 The first category of the taxonomy

Category Actors Forms

International Profit-seeking Exports of innovative
Exploitation of firms and goods.
Nationally Produced individuals Cession of licences and
Innovations patents.
Foreign production of
innovative goods
internally designed and
developed.
Growth in international royalty and licensing payments
and receipts (1950-2009), in millions of US dollars
Exports of commercial knowledge-intensive services,
by selected region/country: 1998–2010

Asia-8 = India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand; EU = European Union
NOTES: EU excludes internal trade. China includes Hong Kong. Source. US NSF, Science and Engineering Indicators 2012
 International Exploitation of
Technology: Stock and Trends
• Strong increase of international trade, especially in
high tech industries
• Strong increase in international patent flows, also
because of new legal arrangements (such as PCT
and EPO)
• International technological payments are growing
• Greater harmonization of intellectual property
rights through TRIPS
• The knowledge intensive service sector is moving
fast
 The second category of the taxonomy

Category Actors Forms

Multinational R & D and innovative
Firms activities both in the home and
the host countries.
Acquisitions of existing R & D
Global Generation laboratories or green-field
of Innovations R&D investment in host
countries
Trasnational Foreign Subsidiaries of National
Public Labs Universities .
Publicly Jointly Funded Research
Centres
Location of foreing affiliated
engaged in R&D
R&D performed in the United States by U.S. affiliates of foreign companies,
by investing region, and R&D performed abroad
by foreign affiliates of U.S. multinational corporations,
by host region: 1998 and 2008

NOTES: Preliminary estimates for 2008 (1998 data in parentheses).

 Motivations for international R&D
1 1,5 2 2,5 3 3,5 4 4,5 5

To adapt products to
local requirements,
regulations,
ingredients, ...

To get access to
skilled researchers
and new talent

To learn from foreign

lead markets or lead
customers

To take advantage of
technology developed
by foreign companies

To keep abreast of
foreign technologies

To support non-
domestic
manufacturing
capability
To comply with local
market access
regulations or
pressures

To take advantage of
Europe MNCs
foreign publicly-funded
Japan MNCs
R & D programs
N-America MNCs
Total
Not satisfied with the
firm environment in
home country
Survey Edler et. al. 2002
Global Generation of Innovations:
Evidence
• MNEs control the sources of 1/4 of national
technology
• MNEs in host countries have a lower R&D
intensity than national firms
• Japanese MNEs loyal to their flag
• New increase in the globalisation of R&D
• Much greater importance in Europe
• Small investment outside the Triad, things are
changing
 S.Ghoshal and C. Bartlett:
Four types of innovation processes

• Centre-for-Global
• Local-for-Local
• Local-for-Global
• Global-for-Global
• Question: do this imply that firms based
across different countries have also
differentiated systems?
 Centre-for-Global
• The octopus company
• One core centre providing all subsidiaries
• Concentration, control
 Local-for-Local
• Conglomerate
• Driven by local user needs
• What keep the corporation together?
• Risks of duplications and of failures
 Local-for-Global
• Get the advantage from various national
innovation systems
• Exploit coordination
• Risks of being unable to put
• together into a
• common product
 Global-for-Global
• Requires strong managerial capabilities
• Coordination costs
• Difficulty to serve properly local market
needs
• If successful,
is the global company
 The third category of the taxonomy

Category Actors Forms

Universities Joint scientific projects.
and Public Scientific exchanges,
Research sabbatical years.
Global Techno-Scientific Centres International flows of students.

Collaborations National and Joint-ventures for specific

Multinational innovative projects
Firms Productive agreements with
exchange of technical information
and/or equipment
Research articles with international coauthors,
by selected region/country/economy
1989–2009
 Co-operate with Rivals?

• Sharing the risks

• Sharing the costs
• Acquiring complementary know-how
• Greater learning opportunities
Global Technological Collaborations:
Evidence
• Firms much keener than in the past to share a
competitive asset as knowledge to reduce the costs
and risks of their investment
• Strong intra-American developments
• European firms quite keen to collaborate with
American counterparts
• No growth of intra-European collaborations in
spite of EU massive stimulus and funding
• Negligible collaborations outside the Triad and no
South-South collaborations
• Something is changing
 A Taxonomy of the Globalisation of Technology
Categories Actors Forms
International Exploitation Profit-seeking firms Exports of innovative goods.
of Nationally Produced and individuals Cession of licences and patents.
Innovations Foreign production of innovative goods
internally designed and developed
Multinational Firms R & D and innovative activities both in the
home and the host countries. Acquisitions of
existing R & D laboratories or green-field
Global Generation of R&D investment in host countries.
Innovations Trasnational Foreign Subsidiaries of National
Public Labs Universities Publicly Jointly
Funded Research Centres
Universities and Joint scientific projects.
Public Research Scientific exchanges, sabbatical years.
Global techno-Scientific Centres International flows of students.
collaborations National and Joint-ventures for specific innovative projects
Multinational Firms Productive agreements with exchange of
technical information and/or equipment

Source : elaboration on Archibugi and Michie, 1995.