IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/14094.html
   My bibliography  Save this book chapter

The IT Revolution and the Globalization of R&D

In: Innovation Policy and the Economy, Volume 19

Author

Listed:
  • Lee G. Branstetter
  • Britta Glennon
  • J. Bradford Jensen

Abstract

Since the 1990s, research and development (R&D) has not only become less geographically concentrated, but there has been especially fast growth in less developed emerging markets like China and India. One of the distinguishing features of the R&D globalization phenomenon is its concentration within the software/information technology (IT) domain. The increase in foreign R&D on the firm side has been largely concentrated within software and IT-intensive multinational corporations (MNCs). This concentration is mirrored on the country side; new R&D destinations such as India, China, and Israel look very different in the types of innovative activity being done there than older R&D destinations such as Germany, France, the United Kingdom, Canada, and Japan. In this paper we will document three important phenomena: (1) the globalization of R&D by US MNCs, (2) the growing importance of software and IT to firm innovation, and (3) the rise of new R&D hubs and the differences in the type of activity done there. We argue that the shortage in software/IT-related human capital resulting from the large IT- and software-biased shift in innovation drove US MNCs abroad, and particularly drove them abroad to “new hubs” with large quantities of science, technology, engineering, and mathematics (STEM) workers who possessed IT and software skills. Our findings support the view that the globalization of US multinational R&D has reinforced the technological leadership of US-based firms in the information technology domain and that multinationals’ ability to access an increasingly global talent base could support a high rate of innovation even in the presence of the rising (human) resource cost of frontier R&D.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Lee G. Branstetter & Britta Glennon & J. Bradford Jensen, 2018. "The IT Revolution and the Globalization of R&D," NBER Chapters, in: Innovation Policy and the Economy, Volume 19, pages 1-37, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14094
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Benjamin F. Jones, 2009. "The Burden of Knowledge and the "Death of the Renaissance Man": Is Innovation Getting Harder?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(1), pages 283-317.
    2. Nicholas Bloom & Charles I. Jones & John Van Reenen & Michael Webb, 2020. "Are Ideas Getting Harder to Find?," American Economic Review, American Economic Association, vol. 110(4), pages 1104-1144, April.
    3. Edwin Mansfield & David Teece & Anthony Romeo, 2008. "Overseas Research and Development by US-Based Firms," World Scientific Book Chapters,in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 12, pages 297-306 World Scientific Publishing Co. Pte. Ltd..
    4. Walter Kuemmerle, 1999. "The Drivers of Foreign Direct Investment into Research and Development: An Empirical Investigation," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 1-24, March.
    5. C. Fritz Foley & William R. Kerr, 2013. "Ethnic Innovation and U.S. Multinational Firm Activity," Management Science, INFORMS, vol. 59(7), pages 1529-1544, July.
    6. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    7. Minyuan Zhao, 2006. "Conducting R& D in Countries with Weak Intellectual Property Rights Protection," Management Science, INFORMS, vol. 52(8), pages 1185-1199, August.
    8. Hall, B. & Jaffe, A. & Trajtenberg, M., 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," Papers 2001-29, Tel Aviv.
    9. Sari Pekkala Kerr & William R. Kerr, 2018. "Global Collaborative Patents," Economic Journal, Royal Economic Society, vol. 128(612), pages 235-272, July.
    10. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 157-189, March.
    11. Richard B. Freeman, 2006. "People Flows in Globalization," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 145-170, Spring.
    12. Serapio Jr., Manuel G. & Dalton, Donald H., 1999. "Globalization of industrial R&D: an examination of foreign direct investments in R&D in the United States," Research Policy, Elsevier, vol. 28(2-3), pages 303-316, March.
    13. Lee Branstetter & Britta Glennon & J. Bradford Jensen, 2018. "Knowledge Transfer Abroad: The Role of U.S. Inventors within Global R&D Networks," NBER Working Papers 24453, National Bureau of Economic Research, Inc.
    14. Wilbur Chung & Juan Alcácer, 2002. "Knowledge Seeking and Location Choice of Foreign Direct Investment in the United States," Management Science, INFORMS, vol. 48(12), pages 1534-1554, December.
    15. Ashish Arora & Alfonso Gambardella, 2005. "The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries," NBER Chapters, in: Innovation Policy and the Economy, Volume 5, pages 1-32, National Bureau of Economic Research, Inc.
    16. Ashish Arora & Lee G. Branstetter & Matej Drev, 2013. "Going Soft: How the Rise of Software-Based Innovation Led to the Decline of Japan's IT Industry and the Resurgence of Silicon Valley," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 757-775, July.
    17. von Zedtwitz, Maximilian & Gassmann, Oliver, 2002. "Market versus technology drive in R&D internationalization: four different patterns of managing research and development," Research Policy, Elsevier, vol. 31(4), pages 569-588, May.
    18. Zander, Ivo, 1999. "How do you mean 'global'? An empirical investigation of innovation networks in the multinational corporation," Research Policy, Elsevier, vol. 28(2-3), pages 195-213, March.
    19. Odagiri, Hiroyuki & Yasuda, Hideto, 1996. "The determinants of overseas R&D by Japanese firms: an empirical study at the industry and company levels," Research Policy, Elsevier, vol. 25(7), pages 1059-1079, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrea Szalavetz, 2019. "Artificial Intelligence-Based Development Strategy in Dependent Market Economies - Any Room amidst Big Power Rivalry?," Central European Business Review, Prague University of Economics and Business, vol. 2019(4), pages 40-54.
    2. Byahut, Rajkumar & Dutta, Sourish & Iyer, Chidambaran G. & Nataraj, Manikantha, 2020. "Commentary on World Development Report 2020: Trading for Development in the Age of Global Value Chains," EconStor Preprints 231380, ZBW - Leibniz Information Centre for Economics.
    3. René Belderbos & Jinhyuck (Joseph) Park & Martin Carree, 2021. "Do R&D investments in weak IPR countries destroy market value? The role of internal linkages," Strategic Management Journal, Wiley Blackwell, vol. 42(8), pages 1401-1431, August.
    4. Sarianna Lundan & John Cantwell, 2020. "The local co-evolution of firms and governments in the Information Age," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1516-1528, December.
    5. David Soskice, 2021. "Transformations of advanced capitalist democracies in the digital era," Transfer: European Review of Labour and Research, , vol. 27(4), pages 527-539, November.
    6. Gandenberger, Carsten, 2018. "The globalisation of corporate R&D: Evidence from German environmental technology companies," Working Papers "Sustainability and Innovation" S14/2018, Fraunhofer Institute for Systems and Innovation Research (ISI).
    7. Xiaolan Fu & Pervez Ghauri, 2021. "Trade in intangibles and the global trade imbalance," The World Economy, Wiley Blackwell, vol. 44(5), pages 1448-1469, May.
    8. Noritsugu Nakanishi & Ngo Van Long, 2020. "A new impetus for endogenous growth: R&D offshoring via virtual labor mobility," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 846-883, August.
    9. Chinloy, Peter & Jiang, Cheng & John, Kose, 2020. "Investment, depreciation and obsolescence of R&D," Journal of Financial Stability, Elsevier, vol. 49(C).
    10. María García‐Vega & Elena Huergo, 2021. "Organization of R&D outsourcing: Asymmetric cross‐effects between locations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(3), pages 503-524, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sari Pekkala Kerr & William R. Kerr, 2018. "Global Collaborative Patents," Economic Journal, Royal Economic Society, vol. 128(612), pages 235-272, July.
    2. repec:zbw:bofrdp:2017_003 is not listed on IDEAS
    3. Lorena D’Agostino, 2015. "The neglected effects of R&D captive offshoring in emerging countries on the creation of knowledge at home," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 61-91, March.
    4. Sari Pekkala Kerr & William R. Kerr, 2018. "Global Collaborative Patents," Economic Journal, Royal Economic Society, vol. 128(612), pages 235-272, July.
    5. Rene Belderbos & Bart Leten & Shinya Suzuki, 2009. "Does Excellence in Academic Research Attract Foreign R&D?," Global COE Hi-Stat Discussion Paper Series gd09-079, Institute of Economic Research, Hitotsubashi University.
    6. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    7. Jing Huang & Linda Krull & Rosemarie Ziedonis, 2020. "R&D Investments and Tax Incentives: The Role of Intra‐Firm Cross‐Border Collaboration," Contemporary Accounting Research, John Wiley & Sons, vol. 37(4), pages 2523-2557, December.
    8. Schmiele, Anja, 2009. "Drivers for international innovation activities in developed and emerging countries," ZEW Discussion Papers 09-064, ZEW - Leibniz Centre for European Economic Research.
    9. Chris Forman & Nicolas van Zeebroeck, 2012. "From Wires to Partners: How the Internet Has Fostered R&D Collaborations Within Firms," Management Science, INFORMS, vol. 58(8), pages 1549-1568, August.
    10. Shasha Zhao & Marina Papanastassiou & Robert D. Pearce & Chie Iguchi, 2021. "MNE R&D internationalization in developing Asia," Asia Pacific Journal of Management, Springer, vol. 38(3), pages 789-813, September.
    11. C. Fritz Foley & William R. Kerr, 2013. "Ethnic Innovation and U.S. Multinational Firm Activity," Management Science, INFORMS, vol. 59(7), pages 1529-1544, July.
    12. Anja Schmiele, 2012. "Drivers for international innovation activities in developed and emerging countries," The Journal of Technology Transfer, Springer, vol. 37(1), pages 98-123, February.
    13. Hegde, Deepak & Hicks, Diana, 2008. "The maturation of global corporate R&D: Evidence from the activity of U.S. foreign subsidiaries," Research Policy, Elsevier, vol. 37(3), pages 390-406, April.
    14. René Belderbos, 2006. "R&D Activities in East Asia by Japanese, European, and US Multinationals," Microeconomics Working Papers 21887, East Asian Bureau of Economic Research.
    15. Rene Belderbos & Vincent Van Roy & Bart Leten & Bart Thijs, 2014. "Academic Research Strengths and Multinational Firms' Foreign R&D Location Decisions: Evidence from R&D Investments in European Regions," Environment and Planning A, , vol. 46(4), pages 920-942, April.
    16. René Belderbos & Elissavet Lykogianni & Reinhilde Veugelers, 2008. "Strategic R&D Location in European Manufacturing Industries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(2), pages 183-206, July.
    17. Marino, Alba & Mudambi, Ram & Perri, Alessandra & Scalera, Vittoria G., 2020. "Ties that bind: Ethnic inventors in multinational enterprises’ knowledge integration and exploitation," Research Policy, Elsevier, vol. 49(9).
    18. Thomson, Russell, 2013. "National scientific capacity and R&D offshoring," Research Policy, Elsevier, vol. 42(2), pages 517-528.
    19. Lee Branstetter & Raymond Fisman & C. Fritz Foley, 2005. "Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U.S. Firm-Level Data," NBER Working Papers 11516, National Bureau of Economic Research, Inc.
    20. Patricia Laurens & Christian Le Bas & Antoine Schoen, 2019. "Worldwide IP coverage of patented inventions in large pharma firms: to what extent do the internationalisation of R&D and firm strategy matter?," Post-Print hal-01725229, HAL.
    21. John Van Reenen & Rupert Harrison & Rachel Griffith, 2006. "How Special Is the Special Relationship? Using the Impact of U.S. R&D Spillovers on U.K. Firms as a Test of Technology Sourcing," American Economic Review, American Economic Association, vol. 96(5), pages 1859-1875, December.

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:14094. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.