International Trade in Services: A World Trade Organization and Asia-Pacific Economic Cooperation Perspective

Due to intensifying international competition, access to knowledge of cutting-edge technology in different countries and locations, and efficient management of internal technology transfer, have both become critical success factors for high-tech firms. This raises the question of whether and to what extent significant differences between firms located in different countries can be observed in international technology acquisition management. A detailed study of 16 leading German and Japanese business units in the semiconductor and pharmaceutical industries reveals that technology acquisition in both industries is far more internationalized in German business units than in those of Japan. Most German business units, particularly in the pharmaceutical industry, have established a full-scale horizontal division of labour between vertically integrated R&D sites in their home country and those abroad. In contrast, the R&D activities of the Japanese business units surveyed are concentrated in their home country. Foreign R&D activities are limited to specific tasks and functions. Thus, in the case of Japanese business units, there is far less technology transfer from foreign sites to the home country than in the case of German business units. Accordingly, assessment of technology acquisition performance by the German R&D managers surveyed is significantly higher than that of their Japanese colleagues. As part of the ongoing integration of the world economy, internationalization of business firm activities will generally increase in the long term. However, the extent of this internationalization differs widely depending on the functional field taken into consideration. In contrast to other fields such as sales, production, and procurement, where the process of internationalization has progressed rapidly in many firms, business activities in the field of R&D, even in large firms, centred predominantly in the home countries until the 1970s.