Growing R&D in Emerging Economies: Implications for International Management and Competitiveness

This paper presents the typology of overseas R&D, by interacting the direction of knowledge flow between home and host countries and the distinction of “research” and “development”, namely (1) technology driven, (2) cost driven, (3) market driven, (4) policy driven, (5) production driven and (6) innovation driven. The management style of local R&D sites is different depending on the type of its R&D activity. For example, for a local R&D activity based on home base exploiting strategy (cost, market, policy and production driven), networking with local innovation system (local firms, university and public research institutions) is less important, but technology driven R&D (based on home base augmentation strategy) requires substantial interactions with local players. In this sense, more autonomy on local R&D activities is needed to facilitate effective knowledge flows at local. Finally, a balance of knowledge flows within firm (headquarter and overseas subsidiary) and within local (subsidiary and local players) is important for innovation driven R&D. In addition, it is important to manage the balance between benefit such as seizing market opportunity and costs such as knowledge leakage to local competitors, particularly for technology and innovation driven R&s sites. Furthermore, in this paper, the relationship between local R&D type and international competitiveness model is discussed. As multinational R&D in emerging economies grow, double diamond model, which takes into local specific factors of overseas sites, as well as domestic factors, focused by original diamond model by Porter, becomes more relevant to analyze international competitiveness of nations.