Robert Pearce

Globalizing research and development

Introduction - Motivation and Determinants of Overseas R & D - Implications and Consequences of Internationalisation of R & D - Summary and Conclusions

The evolution of technology in multinational enterprises: the role of creative subsidiaries

The paper deals with the positioning of dispersed technology acquisition and application in heterarchical MNEs. It suggests that as MNEs acknowledge the need to respond to technological and market heterogeneity, this is best done through creative subsidiaries that access and apply localised dimensions of knowledge. Ultimately the most successful results of this, for the creative subsidiary and its MNE corporate group, are likely to be achieved if exercised as new perspectives within the current technological trajectory of the MNE. New technological dimensions emerging in creative subsidiaries can usefully be allowed to challenge the limits of the groups technology trajectory, but not to usurp it in a disorderly fashion. The aims of central technology management in this type of MNE are, therefore, to retain effective custodianship of a coherent and cohesive technology trajectory, without stifling the ability of creative subsidiaries to generate and apply new knowledge.

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 influence of firm size, industry, nationality, and degree of multinationality on the growth and profitability of the World’s largest firms, 1962–1972

ZusammenfassungDer Einfluβ von Firmengröβe, Industriezweig, Nationalität und Ausmaβ der Multinationalität auf Wachstum und Ertragsfähigkeit der gröten Firmen der Welt in den Jahren 1962–1972. Wir haben zunächst versucht, die Beziehung zwischen Firmenwachstum und Firmengröβe sowie Ertragsfähigkeit und Firmengröβe zu ermitteln. Die erste Beziehung erwies sich als signifikant und stabil; die Beziehung mit der Ertragsfähigkeit war nicht schlüssig.Als zweites haben wir versucht festzustellen, ob es unabhängige Wirkungen auf Wachstum und Ertragsfähigkeit gab, die sich aus der Nationalität der Mutterfirma, aus der Zugehörigkeit zu einem bestimmten Industriezweig und aus dem Grad der Multinationalität der Firma ergaben. Die Wirkungen der Nationalität auf Ertragsfähigkeit und Wachstum erwiesen sich in allen Perioden als stark, wenn die Stichprobe US-Firmen enthielt, waren aber weniger signifikant für Unterschiede zwischen Firmen anderer Länder. Auch die Zugehörigkeit zu einem bestimmten Industriezweig wirkte sehr viel ausgeprägter, wenn in der Stichprobe US-Firmen enthalten waren, obwohl der Industriezweig auch bei Firmen anderer Länder deutlich das Wachstum mehr als die Ertragsfähigkeit beeinfluβt. Die unabhängigen Wirkungen der Multinationalität schlieβlich waren gemischt, sowohl das Wachstum als auch was die Ertragsfähigkeit betrifft. Die Ergebnisse können durch Schwierigkeiten bei der Berechnung der Multinationalität beeinfluβt worden sein. Wir können jedoch auf der Grundlage dieser Ergebnisse diese Variable nicht als einen unabhängigen Einfluβfaktor ausschlieβen. Hier ist weitere Verfeinerung erforderlich. Es ist jedenfalls sicher richtig, den Einflüssen, die von der Nationalität der Mutterfirma und der Zugehörigkeit zu einer bestimmten Industriegruppe her auf das Wachstum und die Ertragsfähigkeit multinationaler Firmen ausgehen, Bedeutung zuzumessen.RésuméL’influence de la grandeur d’entreprise, de l’industrie, de la nationalité et du degré de multinationalité sur la croissance et la profitabilité des entreprises les plus grandes du monde, 1962–1972. — Premièrement nous avons essayé d’établir la relation entre la croissance de l’entreprise et la grandeur de l’entreprise et aussi entre la profitabilité et la grandeur de l’entreprise. La relation susdite se trouvait Être fortement significative et stable; la relation avec la profitabilité n’était pas concluante.Deuxièmement nous avons essayé d’explorer s’il y avait des effets indépendants sur la croissance et la profitabilité qui proviennent de l’industrie et du degré de la multinationalité de l’entreprise. Les effets de nationalité se trouvaient Être très importants pour la profitabilité et la croissance dans toutes les périodes si les entreprises des E.U. étaient inclues dans le sondage, mais peu significatifs pour les différences parmi les entreprises des non-E.U. Les effets de l’industrie étaient aussi beaucoup plus prononcés si les entreprises des E.U. étaient dans le sondage, bien qu’ils clairement influencent la croissance plus que la profitabilité des entreprises des non-E.U.Finalement, les résultats pour l’effet indépendant de la multinationalité étaient mélangés pour la croissance aussi bien que pour la profitabilité. Il semble Être possible que les difficultés ont influé les résultats. Cependant nous ne pouvons pas exclure cette variable comme influence indépendante sur la base de ces résultats. Ici une amélioration additioneile est nécessaire. Cependant les rechercheurs sont clairement justifiés de supposer l’importance des influences de la nationalité de l’entreprise de mère et du groupement sur la croissance et la profitabilité des entreprises multinationales.ResumenLa influencia del tamaño de empresas, industria, nacionalidad y grado de multinacionalidad sobre el crecimiento y rentabilidad de las empresas más grandes del mundo, 1962–1972. — Primeramente hemos intentado establecer la relación entre crecimiento y tamaño como también entre rentabilidad y tamaño de la empresa. La primera relación mostró ser altamente significativa y estable; la relación con la rentabilidad fue inconclusiva.En segundo lugar hemos tratado de asegurar si existen efectos independientes sobre el crecimiento y rentabilidad que surgen de la nacionalidad de la empresa madre, la industria y el grado de multinacionalidad de la empresa. Efectos de nacionalidad mostraron fuertes influencias sobre la rentabilidad y el crecimiento en todos los períodos, cuando firmas norteamericanas fueron incluidas en la muestra, pero menos significativas para las diferencias entre firmas de otra nacionalidad. Los efectos de industria fueron igualmente más pronunciados cuando firmas norteamericanas estaban incluidas en la muestra, a pesar de que ellas claramente influencian el crecimiento como también la rentabilidad de empresas de otra nacionalidad.Finalmente, los resultados para los efectos independientes de multinacionalidad fueron mezclados, tanto para el crecimiento como para la rentabilidad. Dificultades en el cálculo de la multinacionalidad pueden haber influenciado los resultados. Sin embargo, sobre la basis de estos resultados no podemos excluir esta variable como influencia independiente. Se necesita aquí un mayor refinamiento. A pesar de todo, los investigadores están claramente justificados al asignarle importancia a influencias que surgen de la nacionalidad de la empresa madre y de la agrupación industrial sobre el crecimiento y la rentabilidad de empresas multinacionales.

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.

Multinationals and Industrialisation: The Bases of ‘Inward Investment’ Policy

The paper argues that policies towards inward investment should extend, much more decisively and comprehensively, beyond initial attraction in order to seek to secure sustained benefits from these operations. The view of the modern multinational enterprise as a dynamic differentiated network, operating through subsidiaries that have scope for evolution and development, provides a basis for the analysis of the potentials in this regard. The paper discusses in detail the content of particular phases in subsidiary transformation that can then provide a potential for embedding their operations in a host country in a creative and dynamic way that generates mutually supportive interdependencies in processes of resource (notably knowledge) generation and use.

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.

Emerging trading blocs and their impact on the strategic evolution of multinationals

Identifies the similarities and differences between the concepts of regionalism, multilateralism, globalization and localization; and their effects on multinational enterprises (MNEs). Suggests that the responses of MNEs to the emergence of trade blocs are more complex than generally supposed and uses White and Paynter’s (1984) scope typology to analyse the various roles of subsidiaries in MNE strategy. Discusses three types of subsidiary (truncated miniature replica, rationalized product and world/regional product mandate), their strategic application in different economic situations and the effect on host countries.

Sources of Technology and the Strategic Roles of MNE Subsidiaries in China

The paper investigates the importance of six sources of technology as used by MNE subsidiaries operating in China. These are determined by the strategic roles of the subsidiaries. This facilitates analysis of the role of technology both in the competitive development of the subsidiaries and Chinese industrialization. Though these subsidiaries build their bridgeheads in China (mainly to supply the Chinese market) around established, standardized parent‐group technology, there is a tendency to broaden technological scope (mostly locally accessed or generated), especially to generate the capability to develop new goods that target the Chinese market.

Multinational Strategies and Sustainable Industrial Transformation in CEE Transition Economies: the Role of Technology

The material presented in this chapter closely reflects the two dominant concerns of the wider research project from which it derives. The first of these broad concerns is to analyse the content and policy implications of the dynamic interface between the evolutionary processes within MNEs and the industrial transformation and developmental needs of particular Central and Eastern European (CEE) transition economies.1 The second is then to understand the key position of technology within both of these processes, and therefore to elaborate its vital influence in determining the effectiveness and implications of their potentially mutually supportive evolution.