R&D Offshoring to Emerging Economies: Can Poland compete?

Economists have analyzed offshore outsourcing mainly from the perspective of transaction costs and procurement decisions. In the current phase of globalization offshoring practice increasingly involves high value added activities such as design and R&D. Today’s globalized R&D system embraces increasingly capable emerging economies that offer firms new options in terms the offshoring not just development but also research functions. However the offshoring of R&D to emerging economies entails higher levels of risk and uncertainty. The literature review shows that problems associated with this kind of R&D offshoring have seen few studies and are not well understood – especially in a comparative perspective of the practices of companies based in different countries with distinctive business philosophies. Some evidence points to differences in the offshoring practices of US companies – as “globalization leaders”– with those of German companies as “reluctant globalizers”. The paper reports the preliminary results of an ongoing study of offshoring of pharmaceutical and biotechnology R&D to emerging economies. In this study we compare clinical trials destinations chosen by US and German companies – using the American government clinical trials database. We find interesting differences which however do not support the hypothesis that German companies are less aggressive about offshoring clinical trials than US based ones. We also look at the position of Poland as a site for offshored R&D and make recommendations about how the country could improve its competitiveness in this domain in the future. Keywords: innovation, R&D, offshoring, Germany, pharmaceutical industry, biotech, Poland