R&D internationalization. An overview of the driving forces

Until recently, empirical studies had largely reflected the traditional market and demand-driven orientation of Research and Development (R&D) internationalization, as well as the strategic option for localizing the innovative activities in home and host countries found in the developed world. R&D, considered to be among the least internationalized functions of transnational corporations (TNCs), was undertaken in developing countries almost exclusively to adapt products and processes to local conditions. However, the recent changes in the competitive environment determined an acceleration of the R&D internationalisation phenomenon, notably in the newly industrialized economies, and an increasingly stronger correlation to the TNCs' technology sourcing requirements. Against this background, the paper investigates the forces favouring centralization versus geographic decentralization of corporate research, with a view to offer a more comprehensive insight into the strategic aspects of the R&D internationalisation process, by identifying the key factors explaining the recent focus towards localizing corporate laboratories overseas and particularly in developing economies.