Multinational Corporation Research and Development Investment in China

The University Corporation, Northridge, Northridge CA

Investigators

Abstract

The globalization of innovation is an issue of central importance to economic geography and to the economic and social sciences in general. Numerous theoretic and empirical studies have been conducted to investigate the globalization of research and development (R&D) activities in developed countries, but studies on foreign R&D activities in developing countries are relatively rare. Multi-national corporations (MNCs) recently have established a number of R&D facilities in developing countries. The primary objectives of this scientific research project are to examine the nature and scope of foreign-affiliated R&D investment and the major factors affecting their locations in China, which is undergoing a transition from a planned economy to market economy. Based on mail surveys of foreign R&D facilities in China, personal interviews of appropriate scientific and managerial personnel in a selected group of firms and their R&D facilities in China, and web-based research, this study will investigate the following questions: (1) What is the extent of foreign R&D investment in China? Because no directory of foreign R&D facilities exists, the project will create such a list to include information about their locations, parent company, and industrial sector, among others. (2) What are the motivations for MNCs to establish R&D facilities in China? It is hypothesized that such R&D investment is largely demand-driven or policy-driven instead of supply-push, given China's growing market potential and relative backwardness in science and technology development. (3) What is the nature of foreign activities in such R&D facilities? It is expected that such R&D facilities are primarily engaged in transferring technologies, or providing service to the local markets, instead of conducting original research or development for the global market. (4) Where are the foreign R&D facilities located in China? (5) Why are they located where they are? Both quantitative and qualitative methods will be used to analyze the data. The study is expected to show the increasing importance of China in the global innovation networks of MNCs. The study also will shed light on the importance of both supply- and demand-side factors in locational considerations; and it will examine the challenges and opportunities that foreign R&D offer for parent and host countries. This project will provide a better understanding of how developing countries are integrated into global innovation networks through the R&D investment of MNCs. It will lead to a more comprehensive theoretical and empirical framework for studies on the globalization of innovation and R&D organization in MNCs. The study of economic geography of foreign R&D activities in China will advance understanding of how global and local forces interact with each other and shape local, national, and global innovation landscapes. The studyalso will shed new light on the ongoing discussion regarding the roles of global, national, and local forces in the new stage of world development, particularly in the cross-scale production of technologies.