Global R & D networks and large-scale innovations: The case of the automobile industry

Abstract

The transition towards mass flexibility, the increasing heterogeneity of the automobile market, and the penetration of foreign investment have been singled out as important factors behind the rise of post-national corporations operating in multiple regions of the world. Such firms not only conduct sales and assembly operations on a multi-regional basis but, it is claimed, R&D activities on a global basis, thus lending growing credence to the thesis of globalization of R&D activities. The latter is based on the premise that substantial gains are made by: (i) locating R&D laboratories close to clients and pockets of innovation; and (ii) by coordinating activities globally. The purpose of this research is to determine whether R&D activities in the automobile industry are globalized. It was found that the process of large-scale innovation, the acceleration of product development, and the increasing strategic importance of technology tend to concentrate R, D&E activities near the home base. The factors limiting the concentration of this phenomenon are the dispersion of foreign sales, the surveillance of competitor's engineering and styling activities, and the support of foreign assembly plants. Firms pursuing global, export, or regional strategies tend to concentrate R, D&E activities near the home base. Only firms pursuing multi-regional strategies have partly dispersed R, D&E activities to major regional markets. The development of global networks is constrained by communication difficulties, travel time and cost, as well as by pressures for regional autonomy.