Marina Papanastassiou

Overseas R&D and the strategic evolution of MNEs: evidence from laboratories in the UK

Abstract The growth of decentralised R&D units in multinational enterprises (MNEs) is seen as a central element in the ways in which such companies are reformulating their global strategies, as they reposition their worldwide operations in the face of an increasingly intense international competitive environment. Two increasingly important strategic roles for overseas R&D units in MNEs are discerned (and documented using evidence from labs in the UK). Firstly, they enter into new globalised approaches to innovation in MNEs by developing new products, or very distinctive product variants, for key segments of the global marketplace (here Europe). These labs have a very close operative association with other localised functions (marketing, engineering, management). Secondly, decentralised labs may take positions in global programmes of precompetitive investigation (coordinated by their parent MNE group), in which they carry out specialised pieces of basic research that reflect particular areas of expertise within the host-country (here UK) science base. Overall these decentralised R&D units are seen as ways in which MNE groups can turn to their advantage the need to respond to two key elements of the global environment, i.e., market heterogeneity and technological heterogeneity.

The evolution of US outward foreign direct investment in the pacific rim: a cross-time and country analysis

The location determinants of US FDI in the Pacific region of the OECD, i.e. Australia, New Zealand, Japan, and Korea, are analysed for 1982–1997. The data set allowed two time periods i.e. the 1980s and the 1990s, and two different subgroups, i.e. Australia and New Zealand, and Japan and Korea to be distinguished. Statistical evidence indicates a heterogeneous response of US FDI towards different countries and for different time periods. Factors such as market size, income level and qualified and productive labour exert a significant impact on both the timing and the locational choice of US investors in the region.

Technology and production strategies of multinational enterprise (MNE) subsidiaries in Europe

This paper analyses the degree of technology decentralization in four European countries, i.e. Belgium, Greece, Portugal and United Kingdom using a sample of 145 MNE subsidiaries. The research focuses in particular on the sources of technology used by subsidiaries and on the characteristics and roles of overseas Research and Development (R&D) laboratories. The relationship among the various sources of technology and the production roles of subsidiaries is tested using the OLS technique. Results underline the growing importance of decentralized R&D in the strategic re-orientation of MNE subsidiaries roles.

Individualism and Interdependence in the Technological Development of MNEs: The Strategic Positioning of R&D in Overseas Subsidiaries

The growth of decentralized R&D in MNEs1 is central to the ways these companies approach the new competitive pressures of the global economy of the late 20th century. As these companies seek to define positions for technology in the generation of sustained competitiveness, roles for overseas R&D laboratories can emerge at three distinct levels. In the short term, the pressures of global competition mean that MNEs need to produce their well-established products as effectively as possible. Laboratories operating within the subsidiaries that produce such products may support their operations by assisting in the adaptation of the manufacturing process to host-country conditions and of the products to local tastes. However, to carry competitiveness into the medium term MNEs need to substantially upgrade their product range, introducing new generations that embody new concepts that extend the industry’s scope. As a weapon in global competition, such product innovation needs to embody clear international dimensions.2 Though such radical evolution of product scope is still likely to embody substantial elements of the company’s existing stock of knowledge (that is, remain within an established technological trajectory), these major operations in product development will also require the crucial addition of new technology inputs in order to operationalize this knowledge in the emerging commercial context.

Foreign Investment and Ownership Structure: An Empirical Analysis

An important decision that multinational firms (MNFs) face when expandingabroad concerns the specific form of their investment. The usual choice is betweenexports, licensing or franchising, and foreign production. In recent years, followingthe globalisation trend in the world economy, all modes of foreign expansion aremet with increasing frequency. Among them, foreign direct investment (FDI) hasbecome the most popular strategy. Barrell and Pain (1997) report that the number ofMNFs has increased threefold since the 1980s, pushing the ratio of aggregate FDIstock to GDP in OECD economies from 4.7% in 1975 to over 10% in 1995. In thesame year, the value of foreign affiliates’ sales exceeded the value of world exportsby around one quarter. Because of its importance in international development, FDIalong with its determinants has been the subject of extensive research.

An event study analysis of outward foreign direct investment: the case of Greece

The purpose of this article is twofold. Firstly, by applying the event study methodology, it provides detailed and updated evidence on the value generating effect of different modes of foreign direct investment (FDI) entry. Secondly, this is the first paper to empirically evaluate the impact of FDI on the stock returns of Greek firms participating in the Athens Stock Exchange (ASE). In the case of Greece, the cross‐section analysis revealed that successful outward FDI projects tend to be located in developed countries, performed in a high‐technology sector and linked to horizontal integration.

The Determinants of Global Integration Strategies of Chinese Multinationals—Some Empirical Evidence

The main purpose of this research is to understand the determinants of global integration strategies of Chinese Multinational Enterprises (MNEs). In this article, we identify four expansion strategies for Chinese MNEs, that is, horizontal, vertical, lateral and risk diversification and we investigate a series of location and firm-level factors that determine the adoption of each strategy. We present empirical evidence based on data from the 2008 Spring edition of the Lexis Nexis Corporate Affiliates Directory. Our results indicate that Chinese MNEs expand internationally through a grid of strategic choices which is diversified geographically and industrially.

Host-Country Technological and Scientific Collaborations of MNE Subsidiaries: Evidence from Operations in Europe

It has been argued (Papanastassiou and Pearce, 1996a, b; Pearce and Papanastassiou, 1996a) that the increasingly strategic positioning of some multinational enterprise (MNE) subsidiaries not only involves the creative application of current group technology but also the development of local technological competencies that complement those that are acquired intragroup. These subsidiaries then seek to build on locally-developed competencies in individualized ways. This chapter aims to evaluate two types of linkages that MNE subsidiaries may establish in their host economies to achieve these objectives. These links may both facilitate the effective local implementation and productive use of extant group technology, and also seek to enrich these knowledge capacities in ways that particularly reflect local competencies and traditions. The investigated linkages are, firstly, the implementation of arrangements with local suppliers that involve technology transfers; and, secondly, the establishment of collaborative agreements with local scientific institutions for the creation of new knowledge or improvements in the effective local application of existing technology.

Subsidiaries, Innovation and the Strategic Development of Multinationals

The central force driving the views of the Multinational Enterprise (MNE) in the papers that now comprise the core of this book is that of heterogeneity. Thus our view of the processes of globalization, that have conditioned the evolution of the MNE over the past 40 years, is that they have allowed these firms to leverage to greater competitive advantage the differences between locations. This has resulted in MNEs generating heterogeneity in their own increasingly internationally-networked operations. It has also meant that countries (or discrete policy-defined regions within them) have also learnt the benefits of generating differentiated sources of comparative advantage (increasingly deriving from specific institutional and policy arrangements, such as those constituting national systems of innovation).

The Creation and Application of Technology by MNEs’ Subsidiaries in Europe

Recent decades have seen increases of overseas R&D operations, first in US multinational enterprises (MNEs) and later in those from Japan. Substantial parts of this growth have taken the form of laboratories, controlled by these MNEs, located in Europe.1 Furthermore European MNEs have a strongly-established commitment to the performance of R & D in Europe outside of their home country. This chapter argues that this growth of MNE R&D not only serves the obvious fundamental purpose of enhancing a firm’s competitiveness in the European market, but does so in a way that should be seen as also an integral part of the firm’s global strategy for sustained long-term development. In fact an argument of the chapter is that Europe can be seen as a middle level in the strategy of these firms, being perceived as a key region in the formulation of global strategy but also acknowledging the persistence of national needs and characteristics as potentially relevant to the effective implementation of European policies.