One Way or Two Ways Globalization?-The Double-Network Theory and Chinese R&D Internationalization

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Di Minin, Alberto
Zhang, Jieyin
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Recent research has paid much attention to MNCs from developed countries, which are the largest international R&D investors. However, the germination of international R&D investment from emerging countries, such as China, has been neglected in academia. According to data from UNCTAD (2005) and Jaruzelski and Dehoff (2008), FDI into developing and transition countries has increased in the past decades and China has become the most attractive host country of FDI. On the one hand, China has been making efforts in recent years to attract foreign investment in R&D with the aim of enhancing the technology capabilities of Chinese firms (Wu and Callahan, 2005). On the other hand, Chinese MNCs' R&D operations have also begun to expand overseas (Tung, 2005). However, the academia has somewhat neglected the phenomenon of international research and development (R&D) from multinationals headquartered in these economies. Research questions In this paper we claim that the R&D internationalization of Chinese firms is an emerging and variegated phenomenon. From a perspective of a double-network R&D organization perspective, we investigate international R&D motivations (home-based exploration and home-based exploitation) and organizational learning (cooperative learning and experiential learning) of Chinese companies to discuss different patterns of R&D internationalization and the dynamics of modes and goal of learning of multinationals from emerging countries. More specifically, we focus on the following three research questions with the evidence in Europe: Research question 1: Are Chinese MNCs in EU building up double-network R&D organizations? Research question 2: Are Chinese double-network R&D organization guided by home-based exploration or home-based exploitation? Research question 3: What is the dynamics/development of R&D internationalization strategy? Method To answer the research questions and explain if the phenomenon exists, we use the multi-case study method. We first identified 26 R&D units established by Chinese companies in Europe by combining a variety of sources. Then, we select 8 units as our investigation samples, and conducted face-to-face or telephone interviews. Preliminary results In the course of interviews in Europe, we find evidence that both different modes (experiential and cooperative) and different goals (explorative and exploitative) coexist. Our evidence suggests the co-existence of two goals of learning. Chinese companies are planning their R&D subsidiaries in Europe mainly driven by technology exploration, even though some of them are also ambitious to enter the local market. High quality specialized human resources are the most important technology-driven motivation for setting up overseas R&D units in Europe. Our evidence suggests the co-existence of two modes of learning. In order to get new knowledge, Chinese companies try to achieve a good external cooperation. At the same time, through the interaction with local partners, the R&D units go through a maturation process, progressively increasing the level of sophistication of the activities they perform. They gradually become the independent knowledge creators. The role of the European subsidiaries is to both create knowledge (knowledge creator) and transfer back to the company new knowledge (knowledge reverse transfer). Our evidence suggests an evolution of modes and goal of learning. The Chinese double-network first started from cooperative learning finalized to exploration and then moved to experiential learning finalized to exploitation. R&D internationalization of multinationals from emerging countries is a quite new phenomenon and has different characteristics, evolution processes, and catch-up strategies compared with the multinationals from developed countries that deserve more academic attentions and theoretical guidance. Our qualitative analysis is designed to spot the presence of a phenomenon, showing its richness and multiple facets. We set the stage for further studies to explore causalities and managerial implications. Reference Jaruzelski, B. and Dehoff, K., (2008). 'Beyond Borders: The Global Innovation 1000'. strategy+business, 50-69. Tung, R.L., (2005). 'Perspectives-New Era, New Realities: Musings on a New Research Agenda?from an Old Timer'. Asia Pacific Journal of Management, 22 (2):143-157. UNCTAD, (2005). 'World Investment Report (WIR) 2005: Transnational Corporations and the Internationalization of R&D'. New York/Genf: United Nations New York and Geneva. Wu, J. and J. Callahan, 2005, Motive, form and function of international R&D alliances: Evidence from the Chinese IT industry. Journal of High Technology Management Research 16, 173-191.
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