Accessing International Knowledge

Case Aims: To illustrate how firms are utilising R&D centres to access overseas knowledge sources.

Although the majority of high-tech firms still base the bulk of their R&D activities in their home countries, in recent years a number have begun to open new R&D centres overseas (Kuemmerle 1997). Similar to outsourcing, the initial moves were usually motivated by a need to reduce operating costs. Over time, however, the more important reasons for the activity now include (Smallaski 1996):

1. The ability of the company to access new knowledge about relevant technology to suit overseas market circumstances.

  • (continued)
  • 2. Creating and internationally leveraging scientific and technical knowledge, some of which is tacit within a specific country.
  • 3. Permitting organisations to separate routine and creative tasks or processes in order to distinguish predictable processes from non-predictable ones.

Khurana (2006) examined emerging trends in the location of R&D centres in overseas markets. One trend found was that increasingly engineers and scientists in countries such as China, India and Taiwan have achieved world- class standards in their research and NPD activities. Accessing such expertise can be at costs 30-60 % lower than in the USA or Europe. The study indicated there are a number of ways of structuring overseas R&D operations. One is to create autonomous regional R&D centres that focus on meeting local market needs. Another approach is to create highly integrated R&D networks, with key research being undertaken both centrally and delegated to known centres of excellence.

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